system
Equity incentive system is a system that gives employees certain economic rights in the form of obtaining company equity, so that they can participate in enterprise decision-making and profit sharing as shareholders, bear business risks, and make employees' own interests more consistent with those of enterprises, thus serving the long-term development of the company diligently and responsibly. Equity incentive plays a very positive role in improving corporate governance structure, reducing agency costs, improving management efficiency, and enhancing enterprise cohesion and market competitiveness.
In general, equity incentives include employee stock ownership plan (ESOP), stock options and management buyout (MBO).
design factor
1. Incentives: There are not only equity incentives for enterprise managers (such as CEO), but also stock ownership plans for ordinary employees, directors' salaries paid in shares, and grass-roots managers' salaries paid in shares, etc.
2. Stock purchase regulations: that is, the relevant regulations for managers to buy stocks, including purchase price, term, quantity and whether to give up stock purchase. The share purchase price of listed companies is generally determined with reference to the stock market price at the time of signing the contract, while the share purchase price of other companies is determined with reference to the equity value at that time.
3. Provisions on the sale of shares: relevant provisions on the sale of shares to managers, including the provisions on the sale price, quantity and time limit. The selling price is determined according to the market value of the stock right on the sale date, in which listed companies refer to the market price of the stock, and other companies generally calculate the selling price according to a predetermined method. In order to make managers care more about the long-term interests of shareholders, it is generally stipulated that managers can sell their shares after a certain period of time, and the number of shares sold is limited.
4. Rights and obligations: In equity incentives, it is necessary to stipulate whether managers enjoy rights and obligations such as dividend income rights and stock voting rights and how to bear the risk of equity depreciation.
5. Equity management: including management methods, sources of equity acquisition and the proportion of equity incentives to total income. The sources of stock right acquisition include manager purchase, remuneration purchase, technology shareholding, management shareholding and post shareholding. The proportion of equity incentive in managers' total income is different, and its incentive effect is also different.
6. Operation mode: including whether there is an actual transfer relationship of equity, stock source, etc. In some cases, in order to avoid legal obstacles or other operational reasons, the actual transfer relationship of equity does not actually occur in equity incentives. In terms of equity sources, there are stock repurchases, issuance of new shares and stocks. Related concepts In the process of entrepreneurial development, many enterprises need to reasonably arrange the equity incentive mechanism in combination with the actual situation of the enterprise. So, what is equity incentive? We know that the essence of equity incentive is that enterprises should give up part of equity to the incentive object. However, this kind of behavior has many forms, which will lead to the phenomenon of "one enterprise and one case". Therefore, we will interpret the equity incentive from the following three aspects.