Analysis Of The Motivation And Implementation Effect Of Equity Incentives In FP Company

As a long-term incentive mechanism that can reduce the company’s agency cost and improve the company’s performance and business value,equity incentive has been widely used in China since 2006.Equity incentive is mainly through the way of granting equity to the company’s senior management and core employees,so that they can share benefits and risks with the company,fully mobilize their enthusiasm,effectively combine the company’s interests and personal interests,reduce the reduction of interests caused by the differentiation of personal goals and company goals,form a community of interests,and achieve the ultimate goal based on faster and better development of the enterprise.This paper firstly compares the theory and current situation of equity incentive.Secondly,it introduces the basic situation of FP Company,outlines the design of the two equity incentive schemes in 2011 and 2017,and analyses the motivation of its implementation of equity incentive from four aspects: the need for the development of talents,the need for the development of profitability,the improvement of corporate governance structure and the sustainable development of the company.The financial data of FP was then compared horizontally with that of its peers and TGOOD in two periods and vertically with that of the Company over a period of 11 years.The short-term market reaction and long-term market changes of FP companies after equity incentives were analyzed using the event study method.Finally,the analysis concluded that FP Company should formulate a reasonable incentive model and establish more scientific and reasonable unlocking conditions according to the company’s own characteristics,and also put forward some suggestions to improve the shortcomings of FP Company’s two equity incentives from the perspectives of performance evaluation index,exercise condition setting and internal supervision system as well as equity incentive implementation.Through the study of the two equity incentives of FP company,this paper also draws two conclusions: First,in the stock market,the short-term effect of equity incentives of FP companies is not obvious.Second,there is a long-term excess return,and there is a positive promotion effect on the performance of FP companies after the implementation of equity incentives.