The Analysis of Active Constraint of Equity Incentive in Listed Companies

As a long-term compensation incentive, equity incentive can effectively solve the principal-agent problem, reducing managers' short-sighted behavior, improving the management efficiency of enterprises, thereby enhancing the performance of enterprises, and thus known as the "golden handcuffs" of enterprise incentive. One of the reasons that equity incentive is favored in listed companies is that it can curb the brain drain, namely the active constraint of equity incentive. But in recent years, the executive resign phenomenon has been more and more common in listed companies. For company executives and the core talented persons, the once “golden handcuffs” now turns into an elusive fantasy. A large number of executives who were once encouraged by the equity incentive are leaving their posts. The active constraint of equity incentive has not achieved the anticipated level. On the basis of the brief introduction to related concepts of the active constraint of equity incentive, this paper, which used the listed companies as the object of the study, selects 30 equity incentive plans which have a good active constraint of equity incentive to illustrate the present situation of the active constraint of equity incentive plan. After that, this paper selects 57 equity incentive plans which deadlines are 2012.12.31 and expounds three factors which affect the active constraint of equity incentive through the empirical method, then proposes three targeted improvement recommendations: improve the new share pricing system, design an effective equity incentive plan and improve relevant laws and regulations.