As mentioned above, in modern enterprise management, equity incentive is one of the most important means for enterprises to attract and retain talents. However, iron hard disk water soldiers, employees are always suitable for the enterprise stage. Where there is incentive, there will be exit; Where there is an exit, there may be a dispute. At the beginning of equity incentive, the incentive risk is controlled through appropriate scheme design; In the process of equity incentive, it is the consciousness of each incentive party and incentive object to deal with the relationship between incentive party and incentive object in a reasonable way. This paper will discuss the series of cases of the dispute over the equity incentive of Fuanna Company, so that the incentive party and the incentive object can fully understand the equity incentive of the company.

Fuanna Company equity incentive series dispute cases involving more than 80 million yuan, involving more than 20 people. In June 2007, the non-listed company Fuanna held the first extraordinary shareholders' meeting, reviewed and approved the restricted Stock Incentive Plan of Shenzhen Fuanna Household Products Co., LTD. (Draft), and agreed to issue 7 million restricted shares to senior managers and main business backbone by way of private issuance of new shares. The issue price is RMB 1.45 yuan/share (the following currencies are RMB). Later, due to Fuanna's application to the CSRC for IPO, in order to meet the listing requirements and cooperate with the company's listing plan, Fuanna held the ninth meeting of the first board of Directors on March 4, 2008, and reached the "Motion on Terminating the Restricted Stock Incentive Plan (Draft) of Shenzhen Fuanna Household Products Co., LTD.". Decided to terminate the implementation of the Restricted Stock Incentive Plan of Shenzhen Fuanna Household Products Co., LTD. (Draft), and intends to deal with the 7 million restricted shares held by 109 incentive objects as follows: give the restricted stock holders the option to sell back; For the restricted stock holders who waive the stock repurchase option, all the restricted stock holders held by them will be converted into the same number of unrestricted ordinary shares of the Company, with the same shares and rights as those held by other ordinary shareholders of the Company. The "Special Note" section of the draft states: "The term of this restricted stock incentive plan is 4.5 years, including a lock-up period of 1.5 years and a lock-up period of 3 years." On March 20, 2008, Fuanna held the second extraordinary general meeting of shareholders in 2008, and reviewed and passed the "Motion on terminating the Restricted Stock Incentive Plan (Draft) of Shenzhen Fuanna Household Products Co., LTD.". On December 30, 2009, Fuanna successfully landed on the small and medium-sized board. However, from July 2008 to September 2009, some incentive objects such as Yu Songen and Zhou Xichuan submitted resignation applications to Fuanna and successively left the company. After Yu Songen and Zhou Xichuan left their jobs, they all jumped to Mercury Home Textiles, one of the main competitors of Fuanna, Yu Songen was the vice president of Mercury Home Textiles, and Zhou Xichuan was the channel director of Mercury Home textiles. On December 26, 2012, Fu Anna filed a lawsuit with Nanshan Court against 21 former natural person shareholders such as Yu Songen and Zhou Xichuan on the breach of liquidated damages for the "Commitment Letter", requiring each defendant to pay a total of 81.216,700 yuan in liquidated damages.

Taking the equity incentive dispute between Fu Anna Company and Cao Lin as an example, public information such as the judgment shows that Cao Lin joined Fu Anna Company in December 2006 as the director of the production plant. In June 2007, when the company conducted an equity incentive, Cao Lin subscribed for 53,200 shares and paid 77,140 yuan. In March 2008, when the Company terminated the Restricted Stock Incentive Plan, it converted all restricted shares into unrestricted common shares and issued a Confirmation Letter and a Commitment Letter to the Company. The main content of the Confirmation letter is: Cao Lin agrees to convert the restricted shares held by the Company into the same number of unrestricted ordinary shares of the Company, with the same shares and rights as the shares held by other ordinary shareholders of the Company. The main contents of the Commitment Letter are: I, Cao Lin, am a shareholder of Fuanna Company. In view of the fact that I work in Fuanna Company and have obtained 53,200 shares on favorable terms, I shall not submit my resignation to the Company in writing, absent from work for more than seven days consecutiously, or misappropriate the assets of the Company and cause damage to the interests of the Company within three years from the date of signing the Commitment Letter to the date of listing of the Company, In case of violation of the above commitments, Cao Lin shall voluntarily bear the liability for breach of contract to the Company and pay liquidated damages to the Company. The liquidated damages shall be the closing price of the shares held on the date on which they can be publicly sold less the net assets per share of the previous year when the breach occurs. In July 2010, Cao Lin left Fuanna Company. In the lawsuit, the company alleges that Cao Lin has been absent from work for seven consecutive days since July 1, 2010, in violation of the agreement of the Commitment Letter. Cao Lin claimed that Fu Anna illegally terminated the labor contract, but failed to submit other evidence to confirm it. Finally, the court found that Cao Lin's failure to work at the designated factory of Fuanna Company since July 8, 2010 violated the commitment Letter, and according to the content of the Commitment Letter, she should pay a penalty of 1.8989 million yuan and interest to Fuanna Company.

There are two common focuses in the series of disputes over the equity incentive of Fuanna Company. The first focus is: Is the equity incentive dispute a labor dispute or a contract dispute? If it is a labor dispute, it should be adjusted according to relevant laws and regulations such as labor law, and if it is a contract dispute, it should be adjusted according to laws and regulations such as contract law. After hearing, the court held that Fuanna Company issued restricted shares to senior managers and main business backbone in accordance with the Stock incentive Plan, and the incentive object held company shares accordingly. As equity incentive contracts are implemented to optimize the salary system in addition to the protection of basic labor rights such as wages, the stock gains generated by them do not belong to wages and other labor rewards in the meaning of labor law, but are awards and play a role in paying non-competition compensation, and the incentive object has the right to choose whether to participate. Moreover, such contracts reflect the commercial principle of return and risk equivalence, which is consistent with the characteristics of profit and risk of commercial behavior, so the legal disputes between the two parties belong to general civil and commercial contract disputes, not labor disputes. The second focus is: Is the commitment letter signed by the incentive object effective? In fact, the core issue of the Fuanna series of equity incentive litigation from beginning to end is whether the "commitment letter" is true, and legal and effective. After hearing, the court believed that the incentive object and Fuanna formed two legal relationships, one is the labor contract relationship, and the other is the relationship between shareholders and the company. The incentive object makes certain commitments while confirming the conversion of its restricted shares into ordinary shares, which is the commitment of shareholders to the company based on the subscription of shares, and the incentive object exchanges its commitment for stock returns. To judge whether the content of the Commitment Letter conforms to the legal provisions, the Contract Law of the People's Republic of China and the Company Law of the People's Republic of China shall apply. By issuing the "Confirmation Letter" and "commitment Letter", the incentive object obtained the opportunity to receive the benefits of the stock price difference involved, and assumed the obligations described in the "commitment letter", which is in line with the principle of fairness and equal compensation of civil contracts. The court held that the content of the commitment letter issued by the incentive object did not violate the mandatory provisions of laws and administrative regulations, and the commitment Letter was binding on the incentive object.

In order to encourage employees to grant employee stock rights, the stock rights incentive of Fuanna Company was originally carried out to improve employee welfare and encourage employees, but the result turned into a lawsuit against the incentive grant employees. This incident is worthy of reflection by the incentive party and the incentive object. As far as incentives are concerned, on the one hand, enterprises should clearly realize that equity incentive is a major event, and enterprises need to make an overall plan and formulate equity incentive programs suitable for their own development, and combine equity incentive with other welfare benefits and various rules and regulations of the company to cooperate and improve each other, so that employees are really willing to stay and stimulate their enthusiasm and creativity. On the other hand, the enterprise should design a complete incentive scheme to control the risk of equity incentive while realizing the incentive effect. As far as the incentive object is concerned, after the incentive object obtains the incentive equity or benefits of the company based on the incentive plan, the incentive object shall fulfill the corresponding obligations of the equity incentive according to the agreement of the two parties, otherwise, it shall bear the liabilities of the equity repurchase and compensation for liquidated damages. In addition, equity incentive involves the internal personnel management of enterprises, which has certain privacy; As far as the dispute resolution of enterprise equity incentive incentive disputes is concerned, it is suggested to agree on arbitration rather than litigation. Because litigation is open in principle, while commercial arbitration is not open, it has a certain degree of confidentiality.