Research On The Motivation And Scheme Design Of Equity Incentive For Sse Star Market

With the slowdown in economic growth and the further escalation in impact of Sino-US trade friction on technological enterprises,the need for Chinese enterprises to shift from capital-driven to innovation-driven has become urgent.However,it was difficult for technological enterprises to meet their financing needs in capital market.Thus,SSE STAR Market was established.There is a significant breakthrough in the equity incentives system,for example,the second type of restricted stocks was created,the scope of incentives and the proportion of shares granted were expanded,and restrictions on the price of restricted stocks was removed.Moreover,companies with stock options or shareholding plans are allowed to IPO.By December 31 th 2020,215 companies have been IPO,and 72 companies have carried out equity incentives.The implementation of equity incentives for companies in SSE STAR Market has become normalization.Why do companies in SSE STAR Market carry out equity incentives? What is the difference of the design of equity incentives plans between companies in SSE STAR Market with companies in other markets? And how should companies design their equity incentive plans? In view of this,this article analysis the case of Montage Technology Co.,Ltd.to find the motivation,the features of the plans and economic consequences.Firstly,based on the agent theory and human capital theory,this article analyzes and summarizes the significant characteristics of companies and plans and the change of system.Then,based on the analysis of the case of Montage Technology Co.,Ltd.,this article finds the motivation of the equity incentive,and evaluates the quality of the plan from several aspects,such as incentive tools,objects,prices,costs and performance index.At last,this article provides opinions.The conclusions are as followed.Firstly,the companies carried out equity incentive plans for the purpose of alleviating the agency problem,making up for the lack of remuneration contracts and retaining professional talents.Secondly,the companies which carried out plans mainly chose the second type of restricted stocks and independent pricing methods,they also incentivized larger group and adopted new performance index.However,the performance index needs to be improved.The contribution of this article is to summarize the characteristics of equity incentives against a background of the establishment of SSE STAR Market.It will help to understand the equity incentive system and to design equity incentive plans.