Equity incentive model

1. Futures shares,

Option is an equity incentive method that the incentive object owns the shares of the enterprise by partial down payment and installment repayment. The prerequisite for its implementation is that the incentive object must purchase the corresponding shares of the enterprise.

Implementation mode: The enterprise takes the loan from the incentive object as its share investment, and the incentive object has the ownership, voting right and dividend right. Among them, the ownership is virtual and can only be actually owned after the loan for purchasing futures shares is paid off; The right to vote and the right to pay dividends are real, but the dividends must be repaid according to the agreement.

Advantages:

1, the appreciation of stocks is closely related to the appreciation and benefit of enterprise assets, which makes the incentive object pay more attention to the long-term development and long-term interests of enterprises;

2. Effectively solve the financing problem of incentive objects to buy stocks;

3. Overcome the contradiction of income gap caused by one-time reward.

Disadvantages:

1, if the company is not well managed, the incentive object may lose money instead, which reduces the interest of the incentive object in futures stocks;

2. It is difficult to realize the benefits of the incentive object in a short time.

Applicable enterprises:

1, restructuring state-owned holding enterprises;

2. Wholly state-owned enterprises.

Equity incentive mode 2. Stock options,

Stock option is a common equity incentive model, also known as warrant, which refers to a right granted by the company to the incentive object. The incentive object can buy a certain number of circulating shares of the company (exercise) at a predetermined price (exercise price) within a specified time (exercise period).

Implementation mode: The company issues the option certificate to the incentive object, and promises that the incentive object will buy the equity at a lower price within a certain period of time or when certain conditions are met (such as when the company goes public).

Advantages:

1. Stock option is just a right, not an obligation. The holder can give up his rights when the stock price is lower than the exercise price, so there is no risk for the holder.

2. Because stock options can only be realized when they reach a certain time or condition, the incentive object will definitely try its best to improve the company's performance, so that the company's stock value will continue to rise, which has a long-term incentive effect.

3, can improve investor confidence.

Disadvantages:

1, exercise has a time limit;

2. The incentive object needs to pay cash when exercising;

3. There is a risk that the incentive object will use illegal means to raise the stock price too high for its own benefit;

The wage gap within the company has widened.

Applicable enterprises: listed companies and enterprises controlled by listed companies.

Equity incentive mode 3. Blue chip stocks,

Implementation: Determine a reasonable performance index from the beginning. If the incentive object reaches the predetermined goal within the predetermined time limit, the company will grant it a certain number of shares or provide a certain reward for purchasing the shares of the company.

Advantages:

1. For the incentive object, there is a close relationship between job performance and the incentive obtained, and the incentive only depends on job performance, and does not involve uncontrollable factors such as stock market risk.

2. For shareholders, there is a clear performance target constraint on the incentive object, and the power and responsibility are symmetrical, which can form a win-win situation for both parties.

3. As far as the company is concerned, the incentive of performance shares is less restricted and generally approved by the shareholders' meeting, with strong operability and low cost.

Disadvantages:

1, not suitable for start-ups, mainly for enterprises with stable and continuous growth in performance and abundant cash flow;

2. It is difficult to guarantee the scientificity of performance objectives;

3. There is a risk that the incentive object will take fraudulent means to obtain performance;

4. The incentive object is restricted from selling stocks.

Applicable enterprises: listed companies with stable performance and their group companies and subsidiaries.

Equity incentive mode 4. Book value appreciation right,

The book value appreciation right refers to directly using the appreciation of net assets per share to motivate the incentive object. It is not a real stock, so the incentive object does not have ownership, voting rights and matching rights.

Implementation mode:

1. purchase type: the incentive object purchases a certain amount of company equity at the beginning of the period and sells it back to the company at the end of the period according to the actual value.

2. Fictitiousness: the incentive object does not need funds at first, and the company grants a certain number of nominal shares. At the end of the period, the income of the incentive object is calculated according to the increment of net assets per share and the nominal number of shares, and cash is paid.

Advantages:

1, the incentive effect is not affected by the stock price;

2. The incentive object does not need cash expenditure;

3. This method is simple to operate and only needs the approval of the company's shareholders' meeting.

Disadvantages: the increase of net assets per share is limited, and it is difficult to generate big incentives.

Applicable enterprises: listed or unlisted enterprises with abundant cash flow and stable stock price.

Equity incentive mode V. Employee stock ownership plan (ESOP),

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.

Equity incentive mode 6. Virtual stock,

Virtual stock refers to a kind of virtual stock granted by the company to the incentive object, according to which the incentive object can enjoy the dividend right and the value-added income of the stock price, but it has no ownership and voting right, nor can it be transferred or sold, and it will automatically become invalid if it leaves the enterprise.

Implementation mode: the enterprise signs a contract with the incentive object, stipulating the number of awards, the time and conditions of exercising, clarifying the rights and obligations of both parties, and paying dividends every year. When certain time and conditions are met, virtual stocks can be transformed into real stocks, and the incentive object can truly master the ownership.

Advantages:

1, which does not affect the company's total capital and shareholding structure;

2. Avoid the abnormal fluctuation of the company's stock price caused by variables;

3. The operation is simple, and it can be approved by the shareholders' meeting.

Disadvantages:

1, the cash expenditure is large when the incentive is cashed;

2. It is difficult to determine the price when exercising and selling.

Applicable enterprises: listed or unlisted companies with abundant cash flow.

Equity incentive mode 7. Stock appreciation rights,

Stock appreciation rights refers to a right granted by the company to the incentive object. For example, if the company's share price rises, the incentive object can obtain the corresponding amount of equity appreciation income by exercising. The incentive object does not need to pay cash when exercising, but can get corresponding cash or equivalent company shares after exercising.

Embodiment: The company designates a certain number of shares to the incentive object as the object of stock appreciation rights. If the company's share price rises during the exercise period, the incentive object can choose to cash the right and get the benefits brought by the appreciation of the share price, and can choose to get cash or convert it into shares with corresponding amount.

Advantages:

1. The incentive object does not own the ownership of the stock, nor does it have the right to vote or stock options;

2. The exercise period generally exceeds the term of office, which can restrain the short-term behavior of the incentive object;

3. The incentive object does not need cash expenditure;

4. The operation is simple, and it can be approved by the shareholders' meeting.

Disadvantages:

1, the weak efficiency of the capital market makes the stock price have little correlation with the performance of the incentive object, and has little incentive effect on the performance object;

2. The cash pressure of the company is relatively high.

Applicable enterprises: listed or unlisted companies with abundant cash flow and stable stock price.

Equity incentive mode 8. Restricted stock plan

Implementation mode: The company grants the incentive object a certain number of shares of the company according to the predetermined conditions, but the incentive object shall not dispose of the shares at will, and the stock proceeds can only be sold after the specified service period or the completion of specific performance targets. Otherwise, the company has the right to recover the restricted shares donated free of charge.

Advantages:

1, the incentive object does not need to be paid in cash;

2, can motivate the incentive object to focus on the company's long-term strategic goals.

Disadvantages:

1, it is difficult to scientifically determine the performance target and stock price;

2. The pressure of cash flow is high;

3. The incentive object actually owns the stock and enjoys the ownership, so it is difficult for the company to restrain the incentive object;

4. The incentive object has shareholder rights.

Applicable enterprises:

1. Listed companies with poor performance;

2. Listed companies in the process of industrial adjustment;

3. Start-ups.

Equity incentive mode 9. Management buyout (MBO),

MBO, also known as MBO, refers to the company's management using the funds raised by loans to buy the company's equity, thus changing the company's ownership structure, control structure and asset structure, realizing equity-based operation and realizing the complete unity of the incentive and the interests of the company and shareholders.

Mode of implementation: The management of the company * * * jointly invests with employees to set up an employee's shareholding meeting or the management of the company invests (usually in the form of debt financing) to set up a new company as the acquisition subject, and acquires the shares of the company held by the original shareholders at one time or multiple times, thus directly or indirectly becoming the controlling shareholder of the company.

In order to obtain acquisition funds, the general management will use private property as collateral to raise funds from investment companies or investment banks, and then use corporate equity as collateral after the acquisition is successful. If something happens, the investment company will also become a shareholder.

Advantages:

1, which is helpful to reduce the agency cost of managers and promote the long-term healthy development of enterprises;

2. It is conducive to strengthening management incentives, enhancing the value of human capital and enhancing enterprise execution;

3. Conducive to the internal supervision of the enterprise and the constraint on the management;

4. It is conducive to enhancing investor confidence.

Disadvantages:

1, it is difficult to accurately evaluate the company value;

2. Difficulties in financing acquisition funds;

3. If it is not handled properly, the acquisition cost will surge.

Applicable enterprises:

1, enterprises with state-owned capital withdrawn;

2. Collective enterprises;

3. Enterprises in the anti-takeover period.

Equity incentive method X. Deferred payment,

Implementation mode: Deferred payment, also known as deferred payment plan, is a package income plan designed by the company for the incentive object, including part of the annual bonus and equity incentive income, which is not paid in the current year, but converted into the number of shares according to the market price of the company's shares on that day, deposited in a separate deferred payment account set up by the company, and then paid to the incentive object in the form of company shares or cash according to the market value of the shares at the expiration of a certain period.

Advantages:

1, which is closely linked to the company's performance;

2. Long locking time can avoid the short-term behavior of the incentive object;

3. The scheme has strong operability.

Disadvantages:

1, the incentive object holds a small number of shares, so it is difficult to generate a large incentive;

2. The incentive object can't realize the salary in time, which is risky.

Applicable enterprises: listed companies with stable performance and their group companies and subsidiaries.