A Case Study On The Effect Of Espressif's Equity Incentives

To lead the financial market to promote the development of science and technology industry,the Science and Technology Innovation Board is established.Most companies on this board are in talent-intensive and technology-intensive industries,so a stable management and R?D team plays an important role in improving their performance and innovation capabilities.Equity incentives can alleviate the principal-agent problems and restrain behavior of managers and researchers,so it is widely used.Presently,the equity incentives on the board have become normalized tools.Therefore,it is of great significance to study how to improve this mechanism to help companies release their innovation momentum in a long-term manner.This paper chooses the case study method,takes Espressif as the research object,and focuses on the implementation effect of its equity incentives.Espressif is the leader in implementing equity incentives on the Science and Technology Innovation Board,so studying its effect and plans has certain value for improving the equity incentive mechanism in the whole market.Firstly,this paper systematically sorts out the relevant literature and basic theories of equity incentives,and introduces the basic concepts and elements,theoretical basis and action mechanism.Secondly,this paper conducts a case study and compares the differences in the specific design of Espressif's three equity incentive plans.It is concluded that Espressif's equity incentive plan has many incentive objects and high frequency,showing the trend of maturity and normalization.Then,this paper selects two dimensions,the comparison of industry performance and historical performance,to analyze the changes in Espressif's operating performance,managers' investing and financing decisions,researchers' innovation ability,and market investors' responses.The conclusion is that Espressif's equity incentives have a certain positive impact on the company's profitability and operating efficiency,managers' intensity of investment and stability of financing,and the researchers' innovation input and output capabilities.However,in terms of investors' responses,the market is not satisfied with the latter two plans.Therefore,based on studies in the design and implementation effect,this paper summarizes the possible problems,including inappropriate granted time,low granted price,imperfect assessment,subjectivity in stock arrangements and average attribution ratio.Some suggestions are put forward for its follow-up implementation of normalized equity incentives: Firstly,choosing an appropriate time.Secondly,improving the assessment system.Thirdly,increasing the total amount of incentives.Fourthly,making the attribution ratio of each period positively linked to the degree of performance compliance.Fifthly,adopting the accelerated attribution method.