Case Study Of TBEA’s Stock Option Incentive

With the promulgation of the "Measures for the Administration of Equity Incentives for Listed Companies(Trial)" on September 30,2005,more and more listed companies are aware of the advantages of equity incentives.The successful implementation of the "Measures" will not only adjust the company’s internal governance structure,but also maintain the competitiveness of implementing enterprises,Promote corporate development and performance growth to a certain extent.Since 2005,the number of listed companies implementing equity incentive plans has been increasing year by year,and there is a trend of continuous acceleration.With the increase in the number of listed companies,there is still considerable room for development of equity incentives.However,due to the late introduction of the concept of equity incentives in China and the restrictions on capital market conditions,China’s listed companies still lack a lot of experience in practice.The successful cases that can be used for reference and conform to the specific situation of the company are not good enough,which makes the effect of equity incentives of many companies fail to meet the expected goals.In recent years,due to rising raw material costs and weakening government support policies,the power transmission and transformation industry has greatly reduced its profit margins,and competition has become increasingly fierce.As a listed company with strong comprehensive strength in the power transmission and transformation industry in China,TBEA Co.,Ltd.is not only facing cannibalizing market share by foreign companies,such as ABB and Siemens,but also facing low price competition from domestic companies in the same industry.In order to effectively expand market share,increase corporate profits,and ensure long-term development of the enterprise,TBEA urgently needs to stabilize the core team and maintain efficient scientific and technological innovation capabilities.Therefore,the selection and implementation process of TBEA’s stock incentive plan has attracted much attention from both parties.The implementation effect not only affects domestic and foreign counterparts,upstream and downstream enterprises,but also reflects the fluctuation of the company’s stock prices.This article takes the implementation of TBEA’s stock option incentive plan in 2019 as a case study,hoping to provide some reference directions for the implementation of equityincentives for large private enterprises or enterprises in the power transmission and transformation industry.This article firstly explores the motivations for the implementation of this stock option incentive plan,sorts out the procedures and specific content of option incentives,and analyzes the parameter selection of its option settings in detail.Taking Baoding Tianwei Baobian Electric Co.,Ltd.(600550)as a control company to compare the situation of TBEA before and after the implementation of stock option incentives horizontally and vertically from three aspects of financial indicators,non-financial indicators and market response,then getting the evaluation results;.Through the above research,it is finally concluded that the implementation of TBEA’s stock option incentive plan has a positive impact on the company’s financial performance and operating results,but due to the overall weakness of the equity incentive industry sector and insensitivity of the listed company’s equity incentive plan from some investors in the capital market and some other reasons,the stock price of TBEA failed to fully reflect the effect of this equity incentive in the short term.