Fund equity incentive refers to the way that the company grants fund shares to employees when implementing equity incentive scheme.

Employee stock ownership plan under equity incentive mode;

Refers to the equity incentive method in which employees within the company subscribe for some shares of the company and entrust the company to conduct centralized management.

Implementation mode:

1, through the trust fund organization, buy back the shares in the hands of shareholders with part of the planned tax-free profits and distribute them to employees.

2. The enterprise establishes an employee trust fund organization (such as an employee stock ownership meeting), and purchases shareholders' equity according to the employee stock ownership plan and sells it to employees.

Advantages:

1. Employee stock ownership is beneficial for employees to have full voice and supervision over enterprise operation, pay more attention to enterprise development, enhance enterprise cohesion and competitiveness, and mobilize employees' enthusiasm;

2. Employees take certain investment risks, which helps to stimulate their risk awareness;

It can resist hostile takeover.

Disadvantages:

1. Employees may need to spend cash or take on loans;

2. The shares held by employees shall not be transferred, traded or inherited;

3. Strong welfare and poor motivation;

4. On average, it will reduce the enthusiasm of employees;

5. Lack of legal basis and policy guidance in operation.

Applicable enterprises: companies with mature industries and stable growth.