Abstract: In this paper, we selected the companies that had announced and implemented an equity compensation plan during the period from January 1st, 2006 to December 31th, 2013. We used paired samples T test and multiple linear regression method to explore the effects of equity compensation on retention of talented employees. The results are as follows:When the stock price falls down, equity incentive plan might lose value, the executives' turnover is significantly reduced in the companies revoking and then re-announcing an equity incentive plan, compared with the companies revoking and then not re-announcing an equity incentive plan. Faced with an increasingly competitive labor market of core talents, compared with the companies that announce an equity incentive plan only once, the companies that announce twice or more can effectively reduce the executives' turnover, non-executives turnover and the total incentives turnover. In short, equity incentives can effectively reduce employees' turnover and achieve the purpose of retaining talented employees.