Design and Incentives of Equity Incentives in Chinese SOEs in Response to Environmental Uncertainty -- Case study of Hikvision based on grounded theory

Abstract

High-tech companies are the most affected by restrictions on their ability to innovate. As the epitome of high-tech enterprise development in China, Hikvision actively explores and boldly innovates the equity incentive method and is always adapting to cope with internal and external environmental instability. This paper analyzes and compares the first four equity incentives based on the uncertainty factors and motivations of the internal and ex-ternal environment of the enterprise, takes this as the starting point, starts from the environmental motivations, and according to the constructively-rooted theory proposed by Glaser and Strauss, carries out programmed coding for the three dimensions of environmental factors, equity incentive plan selection and overall enterprise value enhancement. In this paper, we investigate the rationality of Hikvision's equity incentive policy setting, evaluate the effectiveness of the equity incentive policy, and predict the likelihood of equity lock-up under future environmental trends through tools such as excess return and return on equity. Based on the advantages and disadvantages, this paper puts forward the improvement of the equity incentive policy already implemented, and puts forward the universal suggestions on the application of equity incentive to deal with the environmental uncertainty, and establishes the equity incentive model for enterprises to deal with the uncertain environment to help enterprises make better management decisions.