The difference between stock reward and cash reward

Equity incentive is to distribute equity to employees and enjoy the company's profit dividends, while cash incentive is a one-time cash reward for employees. In addition, compared with cash rewards, equity rewards involve many matters such as industry and commerce, taxation and so on. And the operation process is complicated. At present, there are two common operation modes: first prize and then investment, and first prize and then investment, that is, the achievement completion unit makes an agreement on the equity distribution of scientific and technological achievements in advance.

Employee stock option

By giving or distributing equity to managers and outstanding employees, the company can increase their sense of belonging and loyalty to the company, thus improving the productivity of employees.

There are generally three methods. One is that the original shareholders transfer their shares to employees, the other is that the company issues new shares to employees, and the third is that the company repurchases shares from the secondary market to meet the demand for stock options and convertible securities. Most companies adopt the second method, which is carried out through a special employee stock option plan.