Research On The Implementation Effect Of Equityincentive In A Company

As a communication link between principals and agents,equity incentive can effectively reduce principal-agent costs and effectively attract and retain the company’s core talents,thus providing more support for the long-term stable development of the company.In recent years,with the continuous change of auto consumption pattern,the development of China’s auto industry is facing fierce competition and challenges.In order to develop and innovate and improve the competitiveness of the market on the basis of stable development,major automobile companies have started to take the initiative to join the army of equity incentives.Therefore,this paper selects the first large state-controlled enterprise A in the auto industry to implement the equity incentive for research.Based on the theoretical basis of equity incentives,this paper briefly analyzes the motivation of the implementation of equity incentives in Company A and presents a comparative analysis of its three equity incentive programs,followed by a detailed analysis of the effects of the implementation of the first two programs.Firstly,the short-term market reaction was analyzed by using event study;secondly,the financial indicators were analyzed by using comparative analysis,and the profitability,solvency,operating capacity and development capacity were studied from 2012 to 2020;finally,the non-financial indicators were selected to analyze the innovation and R&D capacity,market share and employee education.The results found that the first phase of the equity incentive plan had the most obvious effect,and the short-term market response was positive,which promoted its profitability,operation and development ability,but the second phase of the equity incentive plan had little effect on financial performance;the non-financial indicators also played a certain degree of positive effect after the implementation of the equity incentive.Based on the above analysis,the following problems were found in the design of the equity incentive plan of Company A:the lack of comprehensive performance evaluation indicators,the incompatibility between the exercise conditions and the company’s situation,and the inadequate internal and external supervision.Finally,a few suggestions for optimisation have been made,which will hopefully serve as a reference for other car companies to implement equity incentives in the future.