On the Implementation of Equity Incentive and the Risk Control in Chinese Listed Companies

The application of equity incentive in Chinese listed companies faces many problems, e.g. preconditions are too broad, performances cannot be assessed strictly, or expected returns are unpredictable, ultimately which cause greater risks in equity incentive. Risks in equity incentive impact the establishment of long-term incentive mechanism in Chinese listed companies, weakening employees’ enthusiasm for work. Equity incentive risks are chiefly derived from the absence of owners, the imbalance of corporate governance, the non-regulated securities market, and the imperfect regulatory system. To identify and control the risks in the implementation of equity incentive to achieve the purpose of equity incentive needs to be resolved urgently for the reform of pay system in Chinese listed companies.