There are roughly ten types of equity incentive models, namely stock options, stock futures, restricted stocks (rights), fictitious stocks (rights), stock (rights) appreciation rights, book value appreciation rights, performance stocks, deferred payment, and management buyout

and employee stock ownership plans, etc. There are six commonly used types, namely stock options, futures stocks, restricted stocks (rights), virtual stocks (rights), stock (rights) appreciation rights, and performance stocks.

The editor has selected six commonly used equity incentive models and introduced their advantages and disadvantages for everyone: (1) Stock options The stock option model is one of the most classic and widely used equity incentive models in the world.

It is a derivative financial instrument based on futures.

Options essentially price rights and obligations separately in the financial field, so that the transferee of the rights can choose to exercise the rights within a specified time whether to trade or not, or choose to give up the rights, but the obligated party (

listed companies) must perform.

The main points of the content are: with the approval of the shareholders' meeting, the company will use the reserved issued and unlisted common stock options as part of the "package" remuneration, and conditionally grant or award them free of charge at a certain option price determined in advance.

For the company's senior managers and technical backbones, the holders of stock options can make choices such as exercising and cashing out the options within a specified period.

The design and implementation of the stock option model requires that the company must be a publicly listed company, have reasonable and legal sources of stocks that can be used to implement stock options, and must have a capital market with a stock price that can basically reflect the intrinsic value of the stock, a relatively standardized operation, and a well-ordered capital market.

carrier.

Lenovo Group and Founder Technology, which have been successfully listed in Hong Kong, implement the stock option incentive model.

Advantages: 1. It has a long-term incentive effect; 2. It can reduce agency costs; 3. It can improve company performance; 4. It can increase investor confidence.

Disadvantages: 1. Managers use illegal means to raise stock prices for their own benefit; 2. The wage gap between managers and employees further widens.

(2) Stocks Stocks are an equity incentive tool that allows incentive targets (including management and core teams) to own company shares through partial down payment and installment repayment.

It can effectively solve the problem of insufficient cash for one-time payment for managers to purchase shares.

Usually, the enterprise lends money to the incentive objects as their share investment, and the incentive objects have ownership, voting rights and dividend rights for the shares.

But the ownership is virtual, and you can only actually own it after the loan to purchase the shares is paid off.

The voting rights and dividend rights are real, but the dividends cannot be withdrawn before the full payment of the stock price is repaid.

In order to turn futures shares into real shares (shares registered with the Industrial and Commercial Bureau or shares registered with the stock registration department), the incentive recipients must run the company well so that it has dividends available for distribution.

If the company is not managed well, not only the futures shares cannot be turned into real shares, but also the principal invested may not be recovered.

Compared with stock options, stock futures have stronger constraints on incentive objects.

Advantages: 1. Stock appreciation is closely related to corporate appreciation.

Since the value of the stocks held by the incentive recipients is directly related to the company's assets and operating efficiency, this prompts the incentive recipients to pay more attention to the long-term development and long-term benefits of the company.

Stock returns are difficult to cash out in the short term, thus effectively avoiding short-term behavior of incentive targets.

2. Effectively solve the problem of insufficient funds when incentive targets purchase stocks.

Futures stocks can be purchased through personal capital contributions or loans. They can also be paid through annual salary income, dividends, etc., to achieve the original intention of motivating individuals to work harder now with the shares and earnings available in the future.

3. Prevent the widening income gap from having an internal impact on the enterprise.

The income from options is gradual and dispersed. It can be realized once the term expires or a few years after the expiration of the term, or it can be realized uniformly or accelerated at a certain rate every year.

This avoids, to a certain extent, the problem of excessive wealth gaps among internal employees due to the one-time incentive recipients becoming rich overnight, and is conducive to the internal stability of the enterprise.

Disadvantages: It is difficult to realize the stock income of incentive objects in the short term, and they bear the same risks as existing shareholders.

(3) Restricted stock (rights) Restricted stock refers to a certain number of shares of the company granted to incentive targets by a listed company in accordance with predetermined conditions. The incentive targets can only meet the conditions specified in the equity incentive plan if their working years or performance targets meet the conditions specified in the equity incentive plan.

, you can sell restricted stock and profit from it.

The company will grant a certain number of shares to the incentive objects free of charge or after charging a nominal fee, but at the same time it will restrict the rights of such shares.

That is, incentive recipients are not allowed to dispose of stocks at will, and can only sell restricted stocks and benefit from them after a specified service period or when specific performance goals are achieved.

Otherwise, the company has the right to take back the free restricted stock or repurchase it at the price at which the incentive object purchased it.