What is the difference between the equity incentive method and the overtime wage incentive method?

I think one is active motivation and the other is passive motivation. Equity incentives allow the incentivized to take the initiative to strengthen their work motivation, because they will feel that the reward of hard work is visible, and this visibility is the best of their work motivation, and it is also the goal of everyone's struggle. The incentive method of the latter is for everyone to do it because of the needs of the company, which is not everyone's will, and it is also known that overtime should be paid for overtime.

Therefore, the overtime salary incentive method is only a way to motivate everyone in order to temporarily complete a certain task, although it can also get a higher return, but it cannot let everyone have a common belief. (Personal understanding, I hope to communicate and learn more).

Based on your question, Huayi Zhongchuang hereby gives the following:

The implementation of equity incentives by individual or group executives of the company is to make them wholeheartedly focus on production and operation, so that the company's operating performance can be truly improved. The quality of each listed company is improved, and the overall quality of the natural company is also improved.

The incentive object of the equity incentive plan must be the company's employees, and the specific object shall be determined by the company independently according to the actual needs, which may include the directors, supervisors, senior managers, core technical (business) personnel of the listed company, and other employees that the company believes should be motivated (among them, in order to ensure the independence of independent directors, it is clearly stipulated in the officially promulgated "Measures" that the incentive object should not include independent directors), but the personnel with tainted records cannot become the incentive object, so as to urge the senior executives to be diligent and responsible. Combined with the previous provision, we find that all companies and individuals who violate laws and regulations are not taken care of by the equity incentive mechanism, which shows that the purpose of the equity incentive mechanism is to promote the good and eliminate the inferior.

At present, the internationally accepted equity incentives.

The main modes are ** options and employee stock ownership plans.

ESOP), Management Buyout (MBO), Value-Added Rights, Performance, Restricted.

and 10 other kinds. No matter what kind of equity incentive model is adopted, the most basic and core issue is to first figure out how much the enterprise is worth.

Demand scenarios for granting equity incentives.

In market practice, the common proportion of equity incentives for startups is 5% to 20% of the company's equity, and as the company grows, the company may need to set aside a larger share to further motivate existing employees and new members who will join the company. These incentive shares are mainly used in the following four most typical situations, and are issued by the company to the company's employees on a regular basis.

1. Incentives for new employees.

For new employees, they will be granted incentive equity with reference to the market level, so as to provide market-competitive equity incentive remuneration and attract outstanding talents to join. If the mainstream situation in the market is that the position corresponding to the new employee does not need to be granted incentive equity, then the incentive equity of the new employee corresponding to the position can be zero, that is, the employee equity incentive will not be granted for the time being.

2. Promotion incentives.

Incentive equity in the case of promotion is designed to reward the company's old employees who have been promoted. The promotion incentive equity should ensure that the incentive equity obtained by the grantee reaches the market level of the newly hired employee, so as to reduce the employee's impulse to change jobs in order to obtain higher remuneration in this case.

3. Incentives for outstanding performance.

In this case, incentive equity is awarded to outstanding employees in the company and can be paid on an annual basis, aiming to reward these employees for outstanding performance in the previous year. Outstanding performance of incentive equity can be granted with reference to 50% of the market level of incentive equity for the same position at that time. This type of incentive equity is mainly for employees outside of the company's management.

4. Loyalty incentive.

This type of incentive equity is granted to all employees of the company, as long as the employee has served the company for a certain period of time (e.g., two to three years), and a certain share is granted annually thereafter. The logic behind this design is that the company does not want to wait until the employee has fully received the incentive equity granted for the first time before granting a new incentive equity, because at that point in time, the employee may consider and weigh new job opportunities. The annual loyalty incentive can be set at 25% of the market level of the incentive equity at the time of hiring the same position.

The advantage of a 25% annual payment instead of waiting for a lump sum payment after four years is that it can further reduce the economic benefit drive of employee turnover at peak points in the four-year vesting process. Peaks may encourage employees to consider other job opportunities at peak times, and while this can make the implementation of employee equity plans more complex, startups at a certain stage of development should weigh the pros and cons to avoid peaks as much as possible and retain good talent to provide more long-term services to the company.

There are many ways to motivate an employee, you can motivate her to do something, or motivate him to recognize some things more and be better, these are all good ideas.

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

Performance** refers to the beginning of the year to determine a more reasonable performance target, if the incentive object to the end of the year to achieve the predetermined target, the company to grant a certain amount of ** or withdraw a certain amount of incentives ** purchase 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.

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.