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Employee Equity Incentive of Public Companies and Corporate Governance
Employee Equity Incentive;Stock Option;Restricted Stock;Corporate Governance;Central Competent Authority;Controlling Shareholder;Compensation Committee;Abstain from Voting Right
|Issue Date:||2019-07-24 16:02:12 (UTC+8)|
The employee equity incentive, which mainly consists of stock option and restricted stock, is an important tool of human resource and finance of a company. After the 2001 Enron scandal and the 2008 global financial crisis, equity incentive has gradually become a mandatory part of sound remuneration system in American, Europe and Hong Kong. Due to special circumstances in Taiwan, the authority-in-charge has set up strict quantity control on employee equity incentive granted by public companies as an attempt to prevent the improper dilution of shareholders equity by controlling shareholders. Consequently, it is relatively difficult for public companies to enjoy the benefit of equity incentive plan. After tough negotiating with the authority, the solution was to obtain a special approval from the ＂central competent authority of the relevant industry＂ regarding the exemption from quantity restriction for granting equity incentive to an individual. Since equity incentive is only part of employee compensation, a spreadsheet is introduced herein to demonstrate that, for a controlling shareholder who is an executive officer of a company, if he wants to take advantage from compensation package, the best choice is cash incentive, not equity incentive. On the other hand, some corporate governance measures-notably compensation committee-were introduced to Taiwan in the past decade. It is recommended to (1) strengthen the function of compensation committee and require more disclosure of compensation committee's performance; (2) change the ＂quantity control＂ to ＂quantity threshold＂, when the quantity of equity incentive recommended by compensation committee is beyond the threshold, a special shareholders meeting resolution is required for such a grant of equity incentive; and (3) impose mandatory obligation to disclose information thereof if an interest party is the grantee of equity incentive, and to make such an interest party and its related parties abstain from voting right. At the same time, the intervention of administrative approval should be abolished. It is believed that the issues on employee equity incentive should be resolved by corporate governance measures.
|Relation:||法學評論, 151, 253-303|
|DOI 連結:||https://doi.org/ 10.3966/102398202017120151004|
|Appears in Collections:||[法學評論 TSSCI] 期刊論文|
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