The Motivation And Effect Of "1 Yuan Equity Incentive" Policy

With the rapid development of market economic environment and the improvement of policies and norms in recent years,the number and scale of A-share listed enterprises are also growing.Only relying on the ability of shareholders or their own managers has become increasingly unable to meet the needs of long-term development of enterprises.As a result,more and more professional managers began to pour into management.However,the agent problem caused by the separation of the two rights has increasingly become an important issue that cannot be ignored by major shareholders.As a mechanism that can effectively reduce the principal-agent cost,equity incentive plan has been widely used by more and more enterprises to alleviate the agent problem.This thesis chooses the "1 yuan" equity incentive scheme of Dongfang Precision Science&Technology Co,Ltd as the research entry point,the main reason is that the exercise price it sets after meeting the unlocking conditions is only 1 yuan,which is far lower than the minimum price standard stipulated by the regulatory department.And whether this price design is helpful for the enterprise to make beneficial progress in the long-term strategy level,as well as the reasons behind Dongfang Precision Science&Technology Co,Ltd’s choice of this unconventional price are worthy of in-depth exploration.This thesis first describes the relevant background information about the equity incentive plan,and then combs the relevant literature at home and abroad.Secondly,it calculates the number and basic situation of the whole A-share enterprises that have implemented the equity incentive plan,especially the statistical analysis of those enterprises whose unlocking exercise price is far lower than the normal level.Then,it analyzes the equity incentive plan of Dongfang Precision Science&Technology Co,Ltd in 2020 from two main dimensions: incentive motivation and incentive effect.Among them,the motivation is mainly considered from the shareholder level,the mobility of senior technical personnel and the number of patent acquisition.The incentive effect is analyzed from three aspects: market response,financial performance and non-financial performance.In order to analyze the influence of "1yuan" equity incentive more clearly,the conventional equity incentive plan of Orient Seiko in 2013 and the conventional equity incentive plan of Yizhi in 2020 in the same industry were selected as the control group,and horizontal and vertical comparative analysis were conducted respectively.In addition,in the aspect of financial analysis,this paper uses the event study method to test the market’s opinion on the "1 yuan" equity incentive of Dongfang Precision Science&Technology Co,Ltd.And through the analysis of various financial indicators to test the incentive program on the medium and long term financial performance of enterprises.This thesis finds that the "1 yuan" equity incentive program of Dongfang Precision Science&Technology Co,Ltd has no significant results in improving its financial performance,but it has obvious effects in improving its non-financial performance.The research significance of this thesis is to explore whether this type of equity incentive plan is worth further promotion in the capital market by combining the analysis of the specific case of Dongfang Precision Science&Technology Co,Ltd,so as to supplement the research on equity incentive of listed companies.Therefore,it will bring certain reference value and significance to the design and implementation of equity incentive plans for enterprises in different industries in the future.