How to convince employees of equity incentive plans

According to your question, the following is given here:

Equity incentives are generally used more in listed companies, and small and medium-sized enterprises are generally rarely involved. Due to the obvious effect of equity incentive compared with other incentive models, this incentive method has gradually become known to more and more people, and many small and medium-sized enterprises have introduced this medium and long-term incentive model.

However, in the process of introducing and implementing equity incentives in small and medium-sized enterprises, their objectivity and fairness are often questioned by employees, such as "How is the stock price determined?" Why is the incentive so strong? ”

Can it really be objective and impartial? Why do others have more incentive shares than me? ”

Our boss has always had the final say alone, will it be revoked again because of the boss's words in the future? Can the participation incentive really be fulfilled according to the plan? ”

For these problems, Jingbang Management Consulting has the following views:

In response to the first type of problem, the enterprise should organize employees to learn about the equity incentive plan, from how to determine the share capital, how to determine the stock price, what is the company's target growth rate, what is the basis for determining the target growth rate, and so on. Let employees fully understand the design ideas of equity incentives, and also let them understand that "equity incentives≠ employee welfare", incentives are based on the efforts of employees, and only by working together can we achieve the company's goals and achieve incentive benefits.

For the first type of problem, it is necessary to explain in detail the distribution part of the equity incentive plan. Incentive stocks are divided into two categories: historical contribution stocks and performance stocks. Historical contribution stocks mainly consider factors such as past performance, working years, and job level; Performance stocks mainly consider the achievement of performance indicators.

The distribution of incentive shares is generally based on historical contribution and performance, so it will vary from employee to employee.

The first type of problem is relatively difficult to solve, because it is not only related to whether the company's equity incentive is objective and fair, but also closely related to the company's corporate culture, management foundation and management standardization. Therefore, in this case, the following should be done:

First of all, for equity incentives, the company should have a clear and definite equity incentive supporting system, such as an accurate and transparent financial management system, so that the relevant financial data is open and fair; Objective and fair performance management system, etc. At the same time, a special management agency for equity incentives will be set up to implement the relevant systems of equity incentives.

Secondly, from the perspective of the company as a whole, improve the corporate governance framework, establish a corresponding table of responsibilities and rights, and clarify the responsibilities and authority of each department and position.

Third, give full play to the supervisory role of the shareholders' meeting and the board of directors, supervise the implementation of the company's relevant systems, and urge the company to act in strict accordance with the system.

Finally, the company should gradually improve the corporate culture and create a good corporate atmosphere for equity incentives.

Relying on the expert support of the consulting team of Jingbang Consulting, Jingbang Consulting has been deeply engaged in the field of equity consulting for many years, and is committed to providing entrepreneurs with full-process and one-stop services covering equity incentive consulting, share reform knowledge learning, equity incentive training and program landing consulting.

This problem will be encountered in many companies when they carry out equity incentives.

So when doing equity incentives:

1) The boss needs to be determined to divide the shares.

2) Equity incentives need to have a loud and imposing name.

3) Establish corresponding working institutions and systems.

4) Hire a third-party agency, which is more professional and credible.

5) Conduct thorough due diligence beforehand, both internal and external, and convince employees with data.

6) Carry out equity incentive knowledge training and program publicity, so that employees can fully understand the value of equity incentives.

Huayi Lianchuang is to do equity incentives.

Learn equity incentives - Kedu Niang - Huayi Lianchuang.

Equity incentives. It is one of the many ways to motivate employees in the long term, which is an option incentive.

category. Equity incentive is an incentive method that gives certain economic rights to enterprise operators in the form of obtaining the company's equity, so that they can participate in corporate decision-making, share profits and take risks as shareholders, so as to serve the long-term development of the company diligently and responsibly.

Extended Information:1Set clear and credible goals.

Tell employees where they want to take the organization, whether it's for a project team or the entire organization. Be specific and don't over-promise or under-promise.

2.Gain stakeholders.

support. Engage the mind, body and mind of your employees. Motivate them with every possible development and then seek their support. Make employees commit to what they are going to do, when and how they will do it.

3.Training, training, training.

The art of leadership is very much about achieving results through others. For people to be successful, they must have the tools and resources they need, as well as personal involvement, and they need to provide adequate feedback at all times. Many senior leaders have developed a habit of regularly training their direct reports by giving praise and suggestions for progress, rather than waiting until the end of the year for performance reviews.

4.Get out of it and get to the front.

As the item or unit moves forward, or even backwards, it is determined to be front and center, helping to steer the direction.

5.Publish a call to action.

Will it be necessary to change direction in the face of unforeseen circumstances? Or need to motivate your team to move forward? Speak up and ask for people's support. Telling people what needs to be done and what people need to do is not a trivial management, it's leadership.

Let's make our plan come true, master the essentials of my destruction, and go home victorious——— it's as simple as that.

6.Emphasize that communication belongs to everyone.

It's not just leaders who need to communicate, employees need to strengthen their communication skills with each other and up and down at the unit level.

If only the leader was speaking, then the whole organization would be silent. Teams, departments, and even entire organizations that emphasize communication seem to have a better sense of purpose and wholeness. Why? Because people take the time to keep each other informed and aware of what's going on.

7.Personally.

Communication based on language alone cannot be successful, it must be constantly reinforced by action. Just like language, actions stem from an organization's culture and values. Leaders who use language to support their actions and demeanor can energize, energize, emotional, and enthusiastic their subordinates to achieve the results they desire.

The equity incentive plan refers to the form of allowing employees in Kongzhen to obtain the company's equity through the enterprise.

This method can enable them to enjoy certain economic rights, so that they can participate in corporate decision-making, share profits and bear risks as shareholders, so that they can serve the long-term development of the company wholeheartedly, and is a relatively long-term core institutional arrangement necessary for the development of the company.

The equity incentive plan should include share allocation, shares and funds**, incentive purpose, incentive model, incentive object and assessment, share management, etc., which are inconsistent among each company. The equity incentive system is a long-term incentive mechanism implemented by enterprises in order to attract, motivate and retain core talents. The enterprise conditionally gives part or all of the shareholders' rights and interests to the incentive object, so that it can form a community of interests with the enterprise, so as to achieve the long-term development goals of the enterprise.

Institutional advantages

1. Attract, motivate and retain talents.

2. Bind the interests of the boss and employees, integrate the upstream and downstream, share risks, share benefits, and develop together.

3. Solve the potential problems caused by the entrustment relationship between shareholders and executives.

4. Let the company's development goals become the personal development goals of employees, and promote the development of the enterprise at full speed.

5. For some start-up companies, the early cash flow pressure is greater, and employees are given the expectation of future earnings through equity incentives, so as to reduce the expenditure of cash flow.

6. It should be noted that when carrying out equity incentives, the founders need to sell equity at the expense of the shares, and if the proportion is not properly arranged, the control will be threatened.

The company's ways of giving employees equity incentives include performance, options, and virtuality.

Performance** refers to a more reasonable performance target at the beginning of the year, if the incentive object reaches the predetermined target at the end of the year, the company grants it a certain amount of ** or extracts a certain reward ** to purchase the company**. The liquidity of performance** is usually limited in time and quantity.

**Option refers to a right granted by the company to the incentive object, and the incentive object can pre-determine the purchase group of a certain amount of the company's circulation within a specified period of time, or it can waive this right. **There are also time and quantity restrictions on the exercise of options, and Shouli needs to incentivize the target to spend cash on the exercise of the option. At present, the virtual option applied in some listed companies in China is a combination of virtual and option, that is, the company grants the incentive object a virtual subscription right.

Equity characteristics

Equity is the shareholder's investment share in the start-up company, that is, the equity ratio, the size of the equity ratio, which directly affects the shareholder's right to speak and control the company, and is also the basis for the shareholder's dividend ratio. Equity is the rights of shareholders, and there are broad and narrow senses. Equity in a broad sense refers to the various rights that shareholders can claim against the company.

Equity in the narrow sense only refers to the right of shareholders to obtain economic benefits from the company and participate in the operation and management of the company based on their shareholder qualifications. Generally speaking, equity refers to the rights enjoyed by investors due to their investment in citizen partnerships and corporate legal persons. When investing in a partnership, the shareholders bear unlimited liability.

In the case of investment in a corporation, the shareholders bear limited liability. So although both are equity, there is still a difference between the two.

1. Option: A plan to buy shares of a company within a specific period of time using a specific plan.

2. Performance share plan: a first-class grant plan granted according to the achievement of predetermined internal or external performance objectives. These goals must be met within a certain period of time (three to five years) for recipients of incentive plans to be eligible for these**.

Features: Organically combine performance goals with dividends.

3. Restrictive rewards: Restrictive rewards are awards granted by employers to employees, but the rights held by employees are limited to a certain extent and there is a risk of loss.

Features: First, there is a time limit, which is conducive to retaining employees to a certain extent. Restrictions include restrictions on the length of service or the duration of the employment relationship, and employees cannot mortgage, transfer, or transfer until the restrictions have disappeared.

However, employees can receive dividends and voting rights during restricted periods.

Once the restriction disappears, the employee will receive all unrestricted shares, which can be pledged, ** or transferred. Employees who fail to comply with these restrictive requirements will lose their shares. Second, compared with the restrictive unit, it belongs to the first to give.

4. Restrictive ** unit: ** unit is the agreement that issues potential ** at the time of grant, and there may be an actual ** grant when the employee meets the requirements of the grant plan.

Features: An agreement that can be purchased within a certain period of time in the future. I'll give you another ** in the next three years.

5. Accelerated Performance Restrictive Incentive Plan: Accompanied by the traditional time-based restrictive incentive plan, there is a performance-based award-based method, which is often referred to as the "accelerated performance restrictive incentive plan". In this type of program, the time limit can be extended to a longer 10 years instead of 3 years to elevate the retention function.

Features: Longer time, reinforcing the incentive characteristics of pre-determined performance standard limitations.

6. Value-added right: Value-added right is a long-term incentive tool, through which the company grants its executives the right to receive an equal amount of rewards for the future appreciation of the expected shares.

Features: There is no need to buy or issue additional shares, and you can get benefits from the company's value-added.

7. Shadow**: A value-added arrangement granted by the company to executives based on the registered value of the company's shares, fair market value or formula value.

1. The most common form of incentive is the establishment of an employee stock ownership platform.

First, a limited partnership is established, with the majority shareholder of the company acting as the general partner (GP) of the partnership, and the senior executives and core employees acting as the limited partner (LP) of the company. At the beginning, GP can appropriately hold an additional part of the investment share of the shareholding platform, because if there is a new target in need of incentives in the future, GP will transfer a part of the share to the new LP accordingly.

After determining the investment share of each partnership, it is necessary to grant certain restrictions on the equity of each partner, such as the number of years of service in the company, the performance indicators that need to be completed each year, etc. If LP resigns within the period agreed in the agreement, the corresponding investment share needs to be transferred to GP, and at the same time, the transfer is agreed.

2. How to obtain the company's equity by the shareholding platform.

After each LP subscribes the investment funds, the limited partnership increases the capital of the company as a new shareholder. or the original shareholder transfers a part of the equity to the limited partnership. Because it is the equity of employee incentives, whether it is a capital increase or the transfer of the original old shareholders, the corresponding ** is generally low, and the common reference index is the net book assets of the company on the base date of equity transfer (or the agreed base date at the time of shareholding).

When a partnership joins as a new shareholder, there is generally no corresponding tax cost. If the original shareholder's old shares are transferred, if a premium is generated, the original shareholder needs to pay the corresponding personal income tax or enterprise income tax.

3. Whether the employee incentive plan needs to be approved by the resolution of the company's shareholders' meeting.

Under normal circumstances, equity incentives for employees need to be approved by the resolution of the company's shareholders' meeting. After the resolution of the shareholders' meeting is passed, the board of directors or executive directors of the company are authorized to supervise the corresponding operations and incentives.

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