What are the advantages of equity incentive scheme?

1. Attract, motivate and retain talents.

2. Bind the interests of the boss and employees, integrate upstream and downstream, * * * take risks, * * * enjoy benefits and * * * develop together.

3. Solve the potential problems caused by the principal-agent relationship between shareholders and executives.

4. Let the company's development goals become employees' personal development goals and promote the full-speed development of the enterprise.

5. For some startups, the cash flow pressure in the early stage is greater, and employees are expected to obtain future income through equity incentives, thus reducing cash flow expenses.

Extended data

trait

1, long-term incentive

From the perspective of employee salary structure, equity incentive belongs to long-term incentive. The higher the employee's position, the greater the impact on the company's performance. In order to make the company develop continuously, shareholders generally use long-term incentives to closely link the interests of these employees with the interests of the company, so as to build an interest body, reduce agency costs, and give full play to the enthusiasm and creativity of these employees, thus achieving the company's goals.

2. Talent value reward mechanism

The return of talents' value cannot be satisfied by wages and bonuses. The effective way is to directly implement equity incentives for these talents, closely link their value returns with the company's continuous value-added, and repay their contributions to the development of enterprises through the company's value-added.

3. Corporate control incentives

Through equity incentive, employees can participate in management decisions related to enterprise development. After having partial control over the company, they will not only pay attention to the short-term performance of the company, but also pay more attention to the long-term development of the company and be truly responsible for it.

Baidu Encyclopedia-Equity Incentive

Baidu Encyclopedia-Equity Incentive Plan