CATL’s Equity Incentive:Motivation,Effectiveness And Optimization

Scientific and perfect equity incentive can effectively stimulate the work enthusiasm of senior management of enterprises,and thus promote the sustainable development of listed enterprises.From the management practice of China’s A-share listed companies,most of the A-share listed companies in China have long recognized the important value of equity incentive work,and have adopted various kinds of equity incentive measures,more or less,according to the local conditions and time,and constantly optimize the equity incentive measures adopted in the past in practice,in order to maximize the effect of equity incentive measures.Therefore,for China’s listed companies,equity incentives are always on the way.The case study of equity incentives of listed companies in China is a basic background and motivation for the topic of this thesis.This thesis selects CATL,a leading new energy lithium battery company in China and the world,as the object of case study and research,and provides a more in-depth analysis of its equity incentive behaviour adopted during the period from 2018 to 2021,based on and by means of equity incentive-related theories and statistical analysis methods.Firstly,a more detailed description of the current round of equity incentive scheme of CATL is provided.Then,an in-depth analysis of the motivation of CATL to adopt such an equity incentive model was conducted in the light of the company’s initial strategic pattern and business conditions.After that,the event analysis method and the comparison method of relevant financial indicators are adopted to make a more objective quantitative assessment of CATL’ current round of equity incentives in terms of both short-term effects and long-term impacts.Finally,on the basis of the findings of the above three aspects of analysis,targeted countermeasures are proposed for the optimisation of the current round of equity incentive scheme of CATL.It is hoped that the findings of the above four aspects of analysis will be beneficial to the future optimisation of Ningde’s share incentive scheme,and will also serve as a reference for other similar listed companies to design,implement,evaluate and optimise their share incentive schemes.Based on the facts provided by public annual reports and numerous mainstream financial reports,and based on the general theory and methodology of equity incentives,this thesis argues that the four considerations of reducing principal-agent costs,attracting and maintaining a talent pool,enhancing market competitiveness and establishing a long-term incentive mechanism are indeed the basic starting points of CATL’ current round of equity incentives.Through the quantitative analysis method of event analysis and comparison of relevant key financial indicators,this thesis concludes that CATL’ current round of equity incentives has indeed brought positive market effects to the company in the short term,and from a relatively long-term perspective,it has indeed enhanced the core competitiveness and financial performance of the company itself,basically achieving the original intention of the company’s current round of equity incentives.However,based on the content and exercise of the equity incentive,this thesis believes that there is still room for optimisation or improvement of the current round of equity incentive of CATL,that is,the term of the scheme could be longer,the amount of incentive could be larger,and the exercise assessment conditions could be stricter.