What does equity reward mean?

Equity reward refers to the company giving certain rewards in the form of equity in order to motivate employees when their contributions are limited. Compared with traditional cash reward, this kind of reward has a longer-term incentive effect. Because the equity reward is based on the rise and fall of the company's share price, rather than a fixed amount of cash, this means that employees will pay more attention to the company's long-term performance and actively strive for better performance for the company after owning certain shares.

For companies, equity rewards are also a means to attract and retain outstanding talents. For example, the company can attract experts from a certain industry to join the company through the equity incentive plan, so as to improve the company's technology and business level and bring greater development potential to the company. For existing employees, equity reward is also an incentive way, which can stimulate employees' enthusiasm and improve their work enthusiasm and performance quality.

Of course, there are also risks in equity awards, especially for employees. Because the equity return changes based on the performance changes of the company's operating performance, if the company's performance declines, the employee's equity return will also decrease accordingly, and even negative growth may occur. Therefore, for companies, it is necessary to formulate a reasonable equity incentive plan before motivating employees through equity incentives. For employees, we should also treat the risks and benefits of equity incentives rationally, and don't blindly pursue high equity incentives.