Optimizing Executive Compensation Contracts and Sharing Innovation Risks Through Human Capital Collateralization: A Case Study of Yili Group’s AI talent evaluation

Abstract

With the rise of the digital economy and digital-intelligent transformation, companies face the challenges of growing competition for high-end talent and the limited effectiveness of long-term incentives. Meanwhile, since human capital is difficult to collateralize, traditional executive compensation contracts fail to alleviate the agency conflict. Managers tend to perform short-term behaviors, while shareholders emphasize long-term value. Therefore, from the perspective of the collateralizability of human capital and using Yili Group as a case study, this article examined the impact of AI talent evaluation on compensation contracts and innovation risk sharing. The article finds that AI technology significantly improves the accuracy and predictability of talent evaluations, enhancing the collateralizability of human capital, which encourages firms to be more willing to advance long-term equity incentives and to proactively bear the risk associated with expensing R&D costs, and fostering an innovation risksharing mechanism centered on the firms and coordinated with government subsidies. In conclusion, this article not only expands the theoretical framework of human capital theory in the digital intelligence era, but also provides a practical approach for enterprises to optimize long-term incentives and enhance their ability to undertake innovation risk.