Research On Dilemma And Countermeasures Of Equity Incentive Plan

Many enterprises regard equity incentives to be an effective medium-and long-term means of rewarding and motivating employees,thereby boosting corporate development and competitiveness.Equity incentives are prevalent among enterprises in developed economies in the west,with well-designed plans imposing a positive impact on employee motivation.In contrast,China lagged in the adoption of equity incentives.Some enterprises failed to achieve the corresponding benefits of equity incentive mechanisms,leading to limited motivational effects.It was not until 2005 that China began to formulate and improve policies on equity incentives.In response to the external market and internal environment,enterprises have diversified their equity incentive mechanisms,the implementation of which has played a positive role in attracting top talents in the market and stabilizing the core teams,thus driving corporate development.The continuous optimization of equity incentive plans is beneficial for enterprises to accomplish sustainable development,maintain competitiveness and maintain market position.Despite extensive research and analysis on equity incentives by domestic and foreign experts and scholars at present,in practice,enterprises still encounter numerous obstacles in implementing such plans.Engaged in the smart cleaning appliances industry in China,Company A has introduced a three-phase equity incentive plan,aiming to retain its core team,align the interests of shareholders and managers,and bolster its market position.This thesis deploys literature and case studies to dissect Company A’s equity incentive plan.The thesis first provides an overview of the plan and the motivations behind its implementation and then delves into the specifics of the plan,its effects,and implementation obstacles.According to the conclusions,the equity incentive plan,albeit having yielded certain positive effects,was still snarled with several obstacles,such as unreasonable combination and design of incentive models,simplistic performance evaluation system and a lack of timely and systematic adjustments.This thesis attributes the root causes of the obstacles to unsound internal governance structure,unreasonable contractual elements,and imperfect capital market and policy environment,and proposes suggestions accordingly,hoping to provide guidance and suggestions for the formulation of equity incentive plans for listed companies in the future.