A Study on the Effectiveness of the Equity Incentive Plan of Zhuhai Private Enterprises: Based on the Case of Livzon Group

Abstract

Stem from the United States of 1950s, equity incentive plan was introduced into China as a method for enterprises to solve the principal-agent problem and to motivate key technical staffs to speed up innovation after reform and opening-up. This article is divided into three main parts. Firstly a broad introduction to all the Zhuhai enterprises that have carried out the equity incentive plan and analysis on their implementation from five different perspectives , namely rate of progress、industry distribution、pattern、source of stock and the period of validity. Then based on the case of Livzon Group, we conduct survey on both its financial performance and non-financial performance and discuss the effectiveness of its plan by data analysis, according to which we could draw a conclusion that the equity incentive plan works well in Livzon Group, then we continue a further study on the reason behind it. In the last part, feasible policy suggestion is provided from respectively government and enterprise side on the basis of the analysis of the former two parts.