Operation mode of equity incentive

Operation mode of equity incentive: to a certain extent, equity incentive can really link the interests of listed company executives with those of listed companies, thus stimulating their enthusiasm and sense of responsibility. However, this is only from the design or theory. In practice, we should make the four combinations of equity incentives give full play to their positive role.

First, combine with punishment. As an incentive mechanism, it should be an organic combination of reward and punishment. In fact, for a complete system, the reward and punishment system is closely linked, and there must be punishment if there is a prize. If there is only reward without punishment, then such an incentive mechanism is changing the way executives make money. Therefore, the reward system must be combined with the punishment system. At the same time, executives should be rewarded when their performance increases, and those whose performance declines should be punished in the same proportion. As an enterprise incentive mechanism, equity incentive also needs to follow this principle. When the performance appraisal indicators are completed, the executives will be rewarded with equity, and when the specified performance is not completed, certain equity will be recovered or deducted.

The second is to combine with the salary level of executives. At present, the annual salary of executives of listed companies is not low. It can be said that it is their duty to pay a high salary for the development of listed companies, and there is nothing else to reward equity. Now, in order to better combine the interests of executives with the interests of the company, there is a way of equity incentive. This virtually adds a new source of income for executives. Therefore, in order to reflect the fairness and rationality of equity incentive, it is necessary to combine equity incentive with executive compensation level. The proportion of equity incentives in high-paying companies should be low; On the contrary, the proportion of equity incentives for low-paid companies can be appropriately increased.

Third, it is combined with stock market value evaluation. The interests of executives are closely related to those of investors. The increase or decrease of market value is the most direct embodiment of investors' profit and loss. Generally speaking, when a listed company has good benefits, its share price will rise, which will bring about an increase in the market value of the stock. Therefore, it is reasonable to reward executives with equity in this case. Otherwise, the stock market value will drop and investors will suffer investment losses. In this case, it is unreasonable to reward executives with equity.

Fourth, it is necessary to combine the return of the secondary market to investors. The growth of listed companies' performance should also be reflected in the growth of shareholders' return on investment. If this growth cannot be reflected in the increase of investment returns of investors in the secondary market, then for shareholders, this growth is only a kind of book wealth and has no practical significance. Therefore, the equity incentive for executives can be combined with the increase ratio of dividend rate, which can be used as the accrual ratio of equity incentive.