Employee Stock Option Plan (ESOP) refers to a long-term performance incentive plan that incentivizes employees by allowing them to hold the company's stocks and options.

In practice, employee stock ownership plans are often funded by employees within the company to subscribe for part of the company's equity, and the employee stock ownership association is entrusted with the management and operation. The employee stock ownership association represents the stock-holding employees on the board of directors to participate in voting and dividend distribution.

ESOP (Employee Stock Ownership Plans) is an employee stock ownership plan, also known as the employee stock ownership system. It is a form of employee ownership and an institutional arrangement for company owners to share company ownership and future income rights with employees.

Employees own part of the property rights of the company by purchasing part of the company's stocks (or equity) and obtain corresponding management rights. The purpose of implementing the employee stock ownership plan is to make employees shareholders of the company.

Edit this paragraph Types of Employee Stock Ownership Plans Generally speaking, ESOPs can be divided into two categories: non-leveraged ESOPs and leveraged ESOPs.

Edit this paragraph The main functions of the employee stock ownership plan (1) Lay the foundation for corporate democratic management.

(2) Expand funding sources and increase employee income.

(3) Retain talents and provide safety guarantee for employees.

(4) Adjust corporate income rights and transform corporate restraint mechanisms.

Edit this paragraph Implementation steps of the employee stock ownership plan 1. Establish an employee stock ownership meeting to uniformly manage the capital contributions of employee shareholders 2. Define the functions and powers of the employee stock ownership meeting and standardize the organization and behavior of the employee stock ownership plan 3. Employee stock ownership plan

The design content includes: (1) The scope and number of beneficiaries, mainly to determine the qualifications of shareholding employees.

(2) Control of total employee shareholdings and allocation of employee stocks.

(3) Custody of employee stocks.

(4) Sale of employee stocks.

Edit this paragraph to standardize the operating procedures (1) Conduct a feasibility study on the implementation of the employee stock ownership plan, which involves the degree of policy permission; evaluation of the expected incentive effects of the company; financial plan; unification of shareholders' wishes, etc.

(2) Conduct a comprehensive value assessment of the enterprise.

Employee stock ownership plans involve changes in ownership, so reasonable and fair value assessment is necessary for both employees and the company on both sides of the plan.

If the value of a company is overvalued, employees will obviously not be willing to buy it; while if the value of a company is undervalued, it will harm the interests of company owners, which in our country is mainly reflected in the loss of state-owned assets.

(3) Hire professional consulting agencies to participate in the formulation of the plan.

Due to the long-term lack of comprehensive capabilities to operate under a sound market mechanism, Chinese enterprises lack some operational capabilities other than product management.

Especially for such a project that requires comprehensive technology, involves multiple departments and complex relationship definitions, it is necessary to hire a consulting agency with rich professional experience and knowledge and talent advantages to participate.

(4) Determine employee shareholding shares and distribution ratios.

Across the country, due to the special attributes of state-owned enterprises, the fruits of labor accumulated by employees of the enterprise while working for the enterprise have not been realized. Therefore, when determining the remuneration shares that employees deserve for their contributions to the enterprise, in addition, the proportion of employee stock ownership

It must also be consistent with the motive of the plan, which can not only serve the purpose of motivating employees, but also not harm the interests of the original owners of the company.

(5) Clarify the management organization for employee stock ownership.

In our country, each enterprise basically has a relatively sound trade union organization.

For some large enterprises, it is also feasible to learn from foreign experience and have external trust institutions and fund management institutions manage employee stock ownership trusts.

(6) Solve the problem of fund raising for the implementation plan.

In foreign countries, the main source of funds for ESOP implementation is loans from financial institutions. However, under the current situation in my country, employees' own funds are still the main source, and enterprises provide some low-interest loans.

It seems that financial institutions have not yet intervened in ESOPs, but no matter from which aspect, it is feasible to do so, and it will have a certain promoting effect on solving the problem of bank loan outlets and starting investment and consumption.

(7) Develop detailed plan implementation procedures.

The detailed planning procedures for implementing ESOP are mainly reflected in the employee stock ownership charter.

The articles of association should clearly stipulate the principles of the plan, participant qualifications, management organization, financial policies, distribution methods, employee responsibilities, share repurchase, etc.

(8) Prepare approval materials and carry out the approval process.

To be implemented, the plan usually needs to be approved by the group company, the restructuring office, the state-owned assets management department and other departments.

But there is also flexibility in implementation.

Edit this paragraph Implementation methods Judging from common foreign practices, they can generally be divided into non-leveraged ESOPs and leveraged ESOPs.

Non-leveraged Employee Stock Ownership Plan A non-leveraged employee stock ownership plan refers to a company that contributes a certain amount of company stock or cash used to purchase stocks to the plan every year.

This amount is generally 25% of the participant's gross salary, and when this type of plan is combined with a cash purchase pension plan, the contribution rate can reach 25% of the gross salary.

The key points of this type of plan are: (1) The company provides stocks or cash used to purchase stocks to the plan every year, and employees do not need to make any expenditures.