Analysis Of The Impact Of ZTE Equity Incentive On Company Performance

Because of the principal-agent problem and the introduction of "human capital" theory,the purpose of introducing equity incentive plan is to conditionally give employees certain shares,so as to motivate them,so that they have a kind of "master" initiative and share benefits and risks with the enterprise.However,because our stock option system has just started,we are still facing some problems.At the same time,the rapid development of enterprise makes the equity incentive plan develop rapidly in our country.Based on this background,this paper chooses to study the equity incentive problem.This paper adopts the research method combining case analysis and financial index,and takes Maslow’s demand theory,two-factor theory,principal-agent theory and human capital theory as the guidance.Taking ZTE as an example,this paper discusses the effectiveness of stock option incentive scheme in ZTE’s stock option design.First of all,this paper comprehensively collates the international research results related to equity incentive,and gives a detailed description of the relevant concepts and theories involved in this paper.It summarizes the stock incentive plan implemented by ZTE in 2007,2013,2017 and 2020 in four stages and analyzes its background and motivation.Secondly,by selecting financial indicators such as ZTE’s profitability,debt paying ability,operating ability and development ability,and consulting ZTE’s annual report and official website from 2006 to 2021,the longitudinal effect analysis and evaluation are carried out on the index changes before and after the implementation of equity incentive.At the same time,some non-financial indicators are selected as the supplementary content of analysis and comparison to verify the overall effect of financial performance and non-financial indicators equity incentive.Finally,through the effect analysis of equity incentive scheme,the existing problems of ZTE equity incentive are found and suggestions are put forward.The research shows that ZTE’s equity incentive plan in a sense can effectively resolve the company’s "principal-agent problem",reduce the company’s agency costs,has a significant positive effect on performance improvement,innovation and research and development.And the company’s compensation system is optimized,so that the company’s core talents can be retained.However,at present,our country still has some problems,such as the short-term existence of the stock option system,the coverage of the stock option system is relatively small.To this end,this article on ZTE in the implementation of the stock incentive plan in the process of some problems for a profound analysis,and on this basis from the external environment and the design of the program to give some targeted countermeasures.