Research On The Performance Of Equity Incentive In Great Wall Motor Company

The equity incentive system is a long-term incentive mechanism that aims to motivate and retain the core talents of enterprises.However,the effectiveness of implementing equity incentives is influenced by many factors,and whether it can improve corporate performance is a concern for many enterprises.Great Wall Motor,the leading enterprise in China’s traditional automobile manufacturing industry,has implemented large-scale equity incentives for two consecutive years in the new energy transformation period.It is very important for the success of transformation to analyze whether its equity incentives can improve the performance of enterprises,and it is also of some significance for the development of other similar automobile enterprises.Based on the relevant theories of equity incentive,this paper analyzes the corporate performance effectiveness of equity incentive implemented by Great Wall Motor Corporation from four perspectives: financial performance,innovation performance,human capital performance,and market performance,using methods such as financial indicator method,EVA method,"double difference" method,and event study method.The research findings show:(1)From the perspective of financial performance,based on the traditional financial indicator method and the industry average,and based on the "double difference" method,three competitors were selected for comparison.It was found that equity incentives improved the net profit growth ability and self-owned capital profitability,but there was a lack of improvement in debt repayment ability,the operational efficiency of overall assets,and the constraint effect on agency costs;Based on the EVA method,equity incentives briefly enhance the value creation ability.Generally speaking,equity incentives have a positive impact on financial performance,but the incentive effect is limited;(2)From the perspective of innovation performance,after the implementation of equity incentives,Great Wall Motors has continuously improved its research and development intensity and the number of patent applications,enhancing the company’s innovation ability;(3)From the perspective of human capital performance,it is found that after the implementation of equity incentives,the turnover rate of senior executives in the company decreases,the number of R&D personnel and the overall education level of employees increase,which improves the company’s human capital performance;(4)From the perspective of market performance,using the event study method,it is found that after the release of the two incentive plan drafts,the excess return rate and cumulative excess return rate both show a steady upward trend,and the market performance is good.Based on the above research conclusions,this article proposes the following suggestions: setting up a sound performance evaluation index system to increase the effectiveness of incentives,appropriately extending the incentive validity period,carefully selecting incentive targets,and appropriately selecting the timing of implementing equity incentives.