Performance Research Of ZTE's Equity Incentive Plan

In order to balance the interest relationship between shareholders and managers,equity incentive mechanism arises at the historic moment.With the continuous application of this mechanism,it has developed into a mechanism not only for enterprise managers but also for enterprise employees.Domestic equity incentive mechanism has been widely applied since 2005,when relevant legal documents were constantly formulated.However,in the practice and application of enterprises,the implementation effect of equity incentive plan is uneven.China's information and communication technology has developed rapidly in the past decades,and some domestic enterprises rely on their own accumulation over the years to vigorously increase R?D expenditures,promoting the industry to continue to develop,catch up,and constantly narrow the gap with international enterprises.In view of the high demand for information and communication technology talents in the information and communication industry,it is of great significance to carry out equity incentive plan for stimulating key technical talents.This paper takes ZTE,a manufacturer of communication equipment,as a case study to discuss the content setting and implementation effect of four equity incentive plans carried out by ZTE from 2006 to 2020.This paper introduces the basic situation of the implementation of ZTE's fourth equity incentive plan from the implementation background,program content,performance indicators and exercise of the situation,and makes a comparative analysis of the fourth incentive plan from four aspects of exercise conditions,incentive mode,incentive scope and incentive period.At the same time,two performance evaluation methods,financial index change analysis and EVA value change analysis,are used to analyze the difference of enterprise performance change before and after the implementation,and then analyze its non-financial performance from the market reaction of equity incentive plan,personnel change and other aspects.Among them,the change analysis of financial indicators mainly starts from the four basic capabilities,and selects three financial indicators for each capability,respectively,and compares them with the industry average,the implementation and non-implementation enterprises vertically and horizontally.Change analysis of EVA value from the change of EVA value in the four times of equity incentive development process of ZTE combined with the situation of net profit comparative analysis,summarized the advantages and problems existing in ZTE's equity incentive plan.Through the analysis of ZTE's equity incentive plan,it is found that the profitability and growth ability are obviously affected by the equity incentive plan and have a positive effect,while the solvency and operating ability are not significantly affected by the equity incentive plan,the reason may be related to ZTE exercise evaluation indexes specified in the equity incentive plan.At the same time,it is found that the exercise conditions of the fourth equity incentive plan are relatively loose and the incentive momentum is insufficient.In general,except for the fourth equity incentive plan,the incentive effect of the first one is the best among the other three incentive plans.The reason may be that the incentive object of the first equity incentive plan is large and the incentive mode is restricted stock mode.Finally,for the problems existing in the equity incentive plan of ZTE,the author believes that when the equity incentive plan is carried out,appropriately expanding the number of incentive objects to participate,relatively strict performance assessment conditions and relatively long incentive period are the key to achieve better incentive effect of equity incentive.