Huang Zihao Said "Equity Incentive"

How to design the equity incentive plan, I estimate for a lot of people is still more strange, on this topic, the author's ideas on the design of equity incentive.

Generally speaking, the development cycle of an enterprise will go through the initial, growing, mature and declining stages. At every stage, we should solve the problems of short-term motivation and long-term motivation. There are different strategies at different stages. For example, in the initial stage, it is difficult to have cash rewards to employees, and long-term incentives, especially shares, become the first choice.

The incentive target is the best staff, so that every employee is closely tied to the company, especially the key talents, but also to emphasize that "what I am is yours, yours is mine", and give some real shares, so as to retain talents.

But in the recession, shares can not play a big role. Enterprises may go bankrupt at any time, employees lack confidence in enterprises, and the shares are not as good as cash.

Therefore, in order to give full play to the incentive function of stock ownership, we must make a plan that is in line with the current situation according to the development of enterprises.

A successful equity incentive plan first considers the development cycle of enterprises, chooses the methods suitable for enterprises, then starts the design scheme, and the design of the scheme is mainly based on seven key factors.

1, encourage the object.

The incentive object is the beneficiary of stock right, generally there are three ways.

One is the participation of the whole staff. This is mainly in the initial stage, and the second is that most employees hold shares, which is mainly applicable to the high-speed growth period, retaining more talents to support the development of enterprises.

The third is the key employees holding shares, the main beneficiaries are managers and key skills.

There must be some principles for the choice of incentive objects. Employees who do not meet the requirements can not enjoy equity incentive.

When we design a company's plan, we clearly stipulate several principles.

2, incentive mode.

Should the commonly used medium and long term incentives be unified with equity incentive?

There are three ways: equity, option and benefit sharing.

Each method has its advantages and disadvantages, as well as specific prerequisites (Table 2).

For listed companies, options and equity classes are more suitable for non-listed company equity class and benefit sharing class is more suitable.

But no matter which way we should adopt, we must take into consideration the organic combination of incentive mechanism and restraint mechanism, so as to give full play to the enthusiasm of employees.

If only the incentive mechanism is taken into account without considering the constraint mechanism, the shareholding scheme may lose its utility.

For example, the option class will not cause loss to the grantee if the grantee is not exercising right.

3, the total amount and distribution of employee stock ownership.

This one mainly deals with the total amount of equity incentives, the number of equity incentives per income, and the number of reserved stocks used for later incentives.

How to determine the particularity of each company can be determined according to the actual situation, especially for listed companies, to be submitted to the SFC and the general meeting of shareholders.

For each income person, the number of shares is basically determined according to the position. If the company is relatively fair in the job evaluation, the annual income level basically takes into account the value of the position in the company and the ability of the individual, so that the equity ratio can be determined according to the annual income.

For newly inaugurated employees, especially senior executives, the general entry companies need to enjoy medium and long-term incentive plans. They can take a step by step approach, enjoy a 50% proportion in one year after the probation period, and enjoy 100% in one year.