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Equity incentive analysis of listed companies

Author: HengXiaoYing From: www.yourpaper.net Posted: 2009-09-27 14:27:00 Read:
[Abstract] mobilize the the operating layer enthusiasm shareholder value maximization Since 2005, an increasing number of listed companies in the implementation of equity incentive. In this paper, analysis of listed companies in the implementation of equity incentive equity incentive program, reveal the characteristics of the different types of equity incentives, the principal terms of the differences and similarities of different listed companies equity incentive programs, as well as the economic environment and changes in the securities markets, listed company equity incentive exhibit features.
[Key words] equity incentive restricted stock stock options

Equity incentive Overview

The theoretical basis for incentive stock options to maximize shareholder value and ownership, the right to operate the separation. Shareholders to achieve the maximization of equity value held in the separation of ownership and management rights under the modern enterprise system, the implementation of equity incentive. That the operators of the stock as a means of motivation. Board of Directors of the Company under the authorization of the shareholders' meeting, signed an agreement on behalf of the shareholders and the operators, led by incentive target, incentive target to complete certain performance objectives or performance growth, the company's share price rose to a certain extent, the Company granted certain preferential price incentives the stock object or grant a certain price to buy company stock in the period, making it certain interests, promote incentive target maximize efforts for the interests of shareholders.
Original one hundred forty-nine of the Companies Act provides that the company shall not purchase shares of the Company, but in order to reduce the company's capital by canceling shares or merge with other companies of the Company's stock held except; coupled with the SFC issued shares requirements more stringent, therefore, China has been the lack of implementation of equity incentive laws and policy environment. Since 2005, in line with the equity split reform, SFC launched a listed company equity incentive (Trial) ", and the newly revised" in 2005 under the Companies Act, the company to reduce the company registered capital of the shares awarded to acquisition of shares of the Company under the circumstances of the company and workers, this equity incentive for the company to provide the policy and legal environment. By the end of 2008, more than 30 listed companies equity incentive program was approved.

Equity incentive classification

Distinguished from stock sources, equity incentive programs can be divided into the shareholders to transfer their shares and listed companies directed to issue stock to the incentive target, and directed the issuance of stock is divided into stock options and restricted stock. In addition, there is a standard virtual stock option incentives, called stock appreciation rights.
Stock options give incentive target listed companies the right to purchase ordinary shares of the company to a pre-agreed price within a certain period.
A listed company of restricted stock granted in accordance with pre-determined conditions a certain amount of the Company's stock incentive target, incentive target only in work experience or performance goals to meet the conditions of equity incentive plan, before the sale of restricted stock and benefit from it.
By the end of 2008, according to the statistics of the 32 listed company's equity incentive program, the implementation of the shareholders to transfer their shares 7, such as CITIC Securities; 6 implementation of restricted stock, such as Vanke, etc.; implementation of stock options 15 Erie shares; implementation of complex 4 as Yongxin shares. The composite is the restricted stock and options combined, stock appreciation rights and options combined shareholders to transfer their shares and options combined.

The transfer of stock from shareholders equity incentive mainly split share structure reform in 2005-2006 and together, most companies have not used. This article introduces the restricted stock and stock options and other equity incentives.
1 restrictive Stock. Restricted stock, such as stock source segment, that is available to incentive stock repurchase from the secondary market through the provision of incentives Fund or to the incentive target orientation issue stock, can be divided into: provision for incentive fund back purchase type, grant the IPO type (directed issue).
(1) The provision for incentive fund the repurchase of restricted stock. Performance of the company to achieve equity incentive plan agreed upon reward fund extraction conditions, the company extracted incentive fund to buy shares from the secondary market to buy the company, and then wait until the stock granted conditions (such as performance or price), the company will repurchase shares gratuitous gift incentive target.
(2) new shares of restricted stock granted. When the performance of the company to meet the equity incentive plan conditions, granted the premise of the company's stock incentive target a certain number of the incentive object according to a certain price (grant price) to buy the company's stock, the price is generally lower than the market price to determine the price.
2, the stock options. Such as whether to extract part of the reward fund to provide funding for the exercise, and can be divided into no provision for stock options reward fund and provision for stock options reward fund. 15 listed companies in the implementation of stock option, only seven wolves to the increase in net profit amounted to base extracted according to a certain proportion of the reward fund, as one of the sources of funding of the exercise.
(1) Standard stock options. Standard stock options, that is, when the performance conditions are met, and allows you to buy company stock incentive plan identifies the object within a certain period (the vesting period) price (exercise date). If the stock price is high, the incentive target will benefit immensely; company incentive objects right is also a private placement, for a certain amount of funds raised.
(2) to extract the stock option incentive fund. Standard of exercise of stock options, incentive objects are generally self-financing Subscription Shares, seven wolves extract the reward fund as one of the sources of funding incentive target of exercise. Seven wolves October 25, 2006 authorized the incentive target of 7,000,000 stock options, net of non-recurring gains and losses weighted average return on net assets is higher than 10% of the cases in the first three years (2006-2008), based on the net profit growth , extract the reward fund. Incentive fund withdrawal amount = net profit (net profit -10%) * 1/9, and a maximum of 10% of the net profit after tax in the year, the incentive fund is paid within 60 days in the annual report after the announcement of the resolutions to the incentive target. The reward fund is only intended to be used to exercise, and may not be used for any other purpose.
3, restricted stock and stock options. When the performance conditions are met, Yongxin shares increase in net profit amounted to foundation, extracted by a certain percentage of the reward fund. To buy shares from the secondary market, mainly used to reward outstanding contributions to the employees, such as the top ten employees, while 4,000,000 share options granted to directors, senior management, middle management personnel, when the conditions are met, can be phased exercise .

Third, the principal terms of the equity incentive program

1, incentives objects. (1) The basis for the determination. General accordance with the Companies Act, the Securities Act, the listed company equity incentive (for Trial Implementation) "and other relevant laws, administrative regulations and the Articles of Association of the Company, the relevant provisions, combined with the actual situation of the company.
(2) the actual implementation. Company has implemented incentive target is usually the company paid the directors (excluding independent directors), supervisors, senior management, middle management, core technology, business personnel, but also by the company only to directors, supervisors and senior management personnel listed as incentive target. Some companies set aside a portion of restricted stock, stock options to the future introduction of key staff positions.
The Commission in March 2008 equity incentive related matters memorandum stipulates that play to the supervisory role of the supervisors of listed companies to ensure the independence, object shall become equity incentive. September 2008 equity incentive provisions of the memorandum of matters related to: directors, senior management and core technology (business) personnel staff incentive target, the listed companies should analyze its business with a listed company equity incentive plan filing materials or results associated degree of rationality as an incentive.
2, the source of the underlying stock, the number of. (1) The sources of the underlying stock. Underlying stock for equity incentive source of two kinds: the provision for incentive fund repurchases, and directed to issue restricted stock using the above way, but if only through the provision for incentive fund to buy back shares in the form of share incentive in by the Board of Directors the equity incentive plan, only to determine the proportion of provision for incentive fund, can not determine the number of shares, price fluctuations; stock options can only be used to stimulate the object orientation issue, but can determine the number of equity incentive plan.
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