Research On The Effectiveness Of Equity Incentive Program In Private High-tech Enterprises

Private economy is an important part of China’s economic development,and the proportion of high-tech enterprises in private enterprises is more than 70%.In recent years,more than half of the enterprises implementing equity incentives are private high-tech enterprises,and private high-tech enterprises are the main force in implementing equity incentives.However,influenced by complex factors such as the organization form of enterprises,the stage of development they are in,and different industries,the current design of equity incentive programs for private high-tech enterprises in China lacks systematic and scientific analysis,and there are still some problems with the existing equity incentive programs,which affect the effect of equity incentive implementation.In November 2018,General Secretary Xi Jinping pointed out at the symposium on private enterprises that "Supporting the development of private enterprises is the consistent policy of the Party Central Committee,and this will not waver in the slightest." Therefore,in order to achieve higher quality development of private high-tech enterprises,it is quite important to analyze the problems in the design and implementation of their equity incentive programs to improve the effectiveness of equity incentives.This paper analyzes the overview of equity incentives of listed companies in China,and finds that private high-tech enterprises are the main force in implementing equity incentives,and there are still deficiencies in the design of their existing equity incentive programs,such as insufficient incentives for key technical talents and single exercise conditions.In order to make the private high-tech enterprises’ equity incentive achieve better implementation effect and fully realize the growth of enterprise value,it is necessary to analyze the rationality of their incentive scheme design.Therefore,this paper firstly compares the literature on the elements of the design and implementation effect of the equity incentive program,and then analyzes the case with the characteristics of private high-tech enterprises based on the theory of principal-agent theory,incentive theory and human capital theory.The article takes Weixing New Material,a private high-tech enterprise,as the case study,and on the basis of understanding the motivation and implementation process of its three phases of equity incentive,it compares and analyzes the elements of its equity incentive program,and evaluates and analyzes its incentive effect in four aspects: market response,financial performance,R&D and innovation performance and human resource change.Through the analysis,this paper finds that: in terms of the equity incentive effect,the market response of the last two phases of Weixing New Material’s equity incentive is more positive overall;meanwhile,the implementation of the three phases of Weixing New Material’s equity incentive has improved the financial performance and the enterprise’s industry position,and has played a good role in promoting the improvement of the enterprise’s R&D and innovation ability and the stability of the core personnel,and the core competitiveness and comprehensive strength of the company have been improved;while the design of Weixing New Material’s equity incentive program is more positive overall.The design of the equity incentive program of Weixing is generally reasonable,but there are also problems such as single assessment index setting at the company level,low exercise price,and low standard setting for some performance assessment.In this regard,the paper puts forward targeted suggestions such as setting multi-dimensional evaluation indexes,setting reasonable exercise price and performance evaluation standards,and combining the equity incentive with personnel position dynamics.Finally,the article summarizes the design of the elements of the equity incentive program and the formulation of the incentive program.