From a business perspective, what are the most critical factors for business development? Talent. The development of an enterprise can be attributed to the contribution of people, and the decline of an enterprise can be attributed to the problem of people. If enterprises want to develop, they must pay attention to the problem of talents. To find talents, retain talents and make good use of talents has become a key strategy for the development of every enterprise. It is difficult for enterprises without talent strategy to achieve sustainable development. As we all know, Ali, Huawei, millet and other excellent enterprises can only achieve today's achievements, which is inseparable from their talent strategy. With the rapid development of society, the values of talents are also changing. The compensation method that has been effective for a long time is no longer the most important factor to attract talents, let alone to retain outstanding talents for a long time. Equity incentive changes the simple employment relationship, makes the incentive object have a stronger sense of belonging and achievement, meets the deeper needs of the incentive object, greatly mobilizes the enthusiasm and initiative of the incentive object, and realizes the win-win situation of enterprise development and talent development. At present, equity incentive has become an important way for enterprises to attract and retain talents. Many operators have recognized this problem and are actively planning or promoting equity incentives. In practice, there are often business operators will ask: which equity incentive model is good? This is a difficult question to answer, because any kind of equity incentive model has its advantages and disadvantages, and it is not appropriate to talk about the good and bad of incentive model in a metaphysical way. Good or bad does not depend on the model itself, but depends on the needs of the motivator, depends on the actual situation of the incentive object; What is suitable is the best, and vice versa is bad. How do enterprises choose an equity incentive model suitable for their own development needs? Jiao Hanwei, lawyer of Shanghai Guolinghouse Law Firm, will discuss the common equity incentive model from two perspectives of law and operation, so as to provide reference for operators, and then determine the most suitable incentive model for themselves. In view of the listed companies have some special requirements in terms of incentive period and other aspects, and the above special requirements are not universal, this paper only discusses the issue of equity (stock) incentive of limited liability companies and joint stock limited companies in the non-listed stage, hereinafter referred to as equity incentive.

Restricted stock option incentive

Restricted equity incentive means that the incentive party grants a specific share of equity to the incentive object according to the conditions stipulated in the equity incentive plan, but the incentive object is restricted in the transfer of some rights such as the equity obtained based on the incentive plan. The essence of restricted shares is that the incentive party gives the incentive object the equity of the company, but also makes certain restrictions on the incentive object's transfer of equity, setting up security and other disposition behaviors. When the set conditions are not achieved, the incentive object shall not transfer the equity and other disposition behaviors. "Give first and then restrict" is one of the main characteristics of restricted stock incentive. In practice, the restriction condition of the motivated party is usually to meet a certain work period or achieve a certain work performance. The restricted stock incentive model is mainly based on two aspects of business considerations, one is to reward the past contributions of the entrepreneurial team or key employees who accompany the company's growth, and the other is to continue to encourage key employees to grow together with the company and create greater value for the company. Restricted stock incentive has the dual effect of reward and incentive. In practice, it is more applicable to the old employees who have made outstanding contributions to the company. Because the restricted stock incentive belongs to "give first and restrict later", it will involve the issue of share repurchase when the employee dimission occurs. Buy-back schemes such as lock-up period, buy-back condition and buy-back price are the issues that incentivize parties have to consider. Even in the case of a clear agreement on the buyback terms, there is still a situation in which the departing employees do not abide by the agreement between the two parties. Once this situation occurs, disputes need to be resolved through litigation and other means. This incentive model is relatively complicated in operation. This model is mostly used to make great contributions to the company, has passed a certain period of investigation, and needs to continue to motivate employees who grow together; When enterprises introduce talents or motivate new employees, the restricted stock incentive model is less applicable in practice.

Equity option incentive

The equity option incentive is the right of the incentive object to purchase a certain number of shares of the company within a certain period in the future under predetermined conditions. Compared with restricted stock incentive, stock option incentive does not give equity when the incentive party implements the equity incentive, but promises to give the company certain equity when the preset conditions are achieved in the future. "Promise first and give later" is one of the characteristics of equity option incentive. Compared with the two, restricted equity is a kind of restricted equity; Equity option is a right to expect the future, is a right to become a shareholder in the future. The consideration of equity option incentive is mainly to encourage key employees to grow together with the company and create greater value for the company in the future. In practice, the incentive object can obtain the corresponding equity only after meeting a certain work period or achieving a certain work performance. Equity option originated in the United States, which is mainly based on meeting certain performance indicators as the exercise condition, and the exercise time can be long or short. Before the exercise, there are also problems such as equity repurchase and other problems, and enterprises have greater initiative and flexibility, which is the most common and popular incentive method. However, in principle, equity options do not enjoy the right to transfer, set up security and other rights before the exercise, nor do they enjoy the right to dividend, and there is a certain uncertainty about whether the option can be exercised in the end, so the attraction of the incentive object is weaker than that of the restricted equity incentive. Stock option incentive is not a good reward for the old employees who have made outstanding contributions. It is more suitable for introducing new employees or encouraging new employees to grow together with the company in the future work and create greater value for the company.

Virtual equity incentive

Virtual equity incentive means that the company grants a virtual equity to the incentive object, according to which the incentive object can enjoy a certain amount of dividend rights, but the incentive object is not the real sense of the company's shareholders, and does not enjoy ownership, voting rights, transfer rights, inheritance rights and other shareholder rights, and of course no longer enjoy the virtual stock rights when he leaves the company. Virtual equity is essentially a right to pay dividends, not equity. In practice, the incentive object can obtain the corresponding virtual equity only after achieving certain work performance. Compared with the restricted equity incentive and equity option incentive, the incentive pair granted by the virtual equity incentive company is "virtual" equity. When the company achieves the performance target, the incentive object can enjoy a certain amount of dividend rights accordingly. The virtual stock does not enjoy the rights of ownership, voting rights, inheritance rights and other shareholders, and does not need to register as shareholders in the industrial and commercial or Chinese companies, so the operation is the most flexible. Virtual equity is easy to operate, as long as an internal agreement is drawn up, there is no need to change the company's ownership structure, and there is no need to consider the source of incentive equity, which is a major advantage of virtual equity incentive. However, in this incentive model, employees do not enjoy ownership, voting rights, inheritance rights and other shareholder rights, so the incentive effect on employees is weak. In addition, due to the large cash expenditure of enterprises for incentive, it will affect the cash flow of enterprises. After all, not all enterprises can ensure sustained high growth and high profits, which puts forward certain financial requirements for enterprises to implement virtual equity incentive. When implementing the virtual equity incentive model, how to evaluate the performance of the personnel participating in the virtual equity incentive plan is another issue to be considered. Enterprises implementing virtual equity incentives should carefully consider how to link managers' compensation with their performance. In practice, virtual equity incentive is mostly used for enterprises with good cash flow to motivate sales and other front-end personnel in a timely manner. This model can not only determine the performance of incentive objects, but also flexibly allow incentive objects to share business performance in the first time, and the incentive effect is outstanding.

Restricted stock incentive, stock option incentive and virtual stock incentive are the three most common incentive models. In addition to the above incentive models, there are incentive fund incentive and other non-mainstream incentive models, which will not be repeated here. It needs to be emphasized again that each equity incentive model has its own specific application soil, and the determination of incentive model is not only a legal issue, but also a business issue. The incentive party should hire professional lawyers to determine the most suitable incentive model and incentive plan according to the comprehensive judgment of the company's development stage, industry, financial status, incentive object and other business factors. In practice, due to the diversity of incentive objects, many motivators will adopt two or more incentive modes in their incentive plans. In order to understand the characteristics of various incentive models more clearly, we make a simple comparison of various equity incentive models, which is convenient for managers to refer to when determining specific incentive models.