1. How is Employee Stock Ownership Plan determined?
Employee Stock Ownership Plan's Operating Rules:
(1) Conditions of Implementation: From April to May each year, cadres and department heads shall decide on the qualifications and quantities of shares granted to employees according to their positions, working years and results of the previous year's performance appraisals.
(2) Incentive quotas: The maximum amount of shares held by employees at each job level is the limit, that is, the full line of shares.
(3) Incentive objects: All employees above the 13th level have qualification of shares, and employees can choose whether or not to purchase the company's shares voluntarily.
(4) Grant price: the net assets per share after the end of the previous year after deducting the annual dividend value.
(5) Allocation of Equity: According to the operation of the Company in the previous year, a resolution on the amount of dividends paid by shareholders' general meeting shall be made.
(6) Transfer and recovery: The Company allows employees to apply for withdrawal of shares, the shares can be transferred to the company, the settlement price for the holding period of more than 3 years according to the most recent net asset value of the shares held within 3 years by the time of purchase price. According to the staff performance appraisal, the company also has the right to recover the shares held by employees.
2. What is the objective of Employee Stock Ownership Plan?
During the start-up period, Huawei needed large amounts of funds due to market expansion and scale expansion. On the other hand, Huawei needed a large amount of investment in scientific research to suppress competitors. In addition, due to the nature of private enterprises at that time, financing difficulties arose. Therefore, Huawei prefers internal financing. Internal financing does not need to pay interest, there is a lower risk of financial distress, do not need to pay a higher rate of return to external shareholders, and can inspire employees to work hard.
In the era of the network economy bubble in 2000, the IT industry was devastatingly affected, and financing was unprecedentedly difficult. At the end of 2001, Huawei began to implement the option reform called "Virtual Restricted Share".
Virtual stock refers to a virtual stock granted by the company to the incentive object, so the incentive object can enjoy a certain amount of dividend rights and stock price appreciation rights, but it has no ownership, no voting rights, cannot be transferred and sold, and automatically expires when leaving the enterprise. The issuance of virtual shares maintains Huawei's management control over the enterprise without causing a series of management problems.
In 2003, Huawei, which had not survived the bubble economy, suffered another hit with SRAS. Its export market was affected. Meanwhile, Huawei's global lawsuit directly affects Cisco's global market. Huawei internally called for more than mid-level employees voluntarily submit "payroll applications", while further implementation of the management buyout, and stabilize the workforce.
In 2008, the global economic crisis triggered by the U.S. subprime mortgage crisis caused heavy losses to the world economic development. Faced with the impact of the current economic crisis and the deterioration of the economic situation, Huawei introduced a new round of equity incentive measures. The process of equity incentive of Huawei shows that equity incentive can closely connect the human capital of employees with the future development of the enterprise and form a virtuous circle system. Employee equity, participation in company dividends, to achieve the company's development and staff personal wealth added value, while equity financing and internal financing simultaneously, can increase the company's capital ratio, the company cash flow to buffer the tension.
Since Huawei did not go public, the early establishment of restricted virtual shares can only be targeted at Chinese-owned employees. As the proportion of foreign employees increases, Huawei, a globalized company, must also consider long-term incentives for "crooked kernel of benevolence" Therefore, we need to find a way to operate in line with international standards. To this end, Huawei introduced incentive plan (TUP) is first used to solve the incentive problem of foreign employees.
3. Are Employee Stock Ownership Plan available for everyone?
Fresh graduates just entered the company, there will be no shares, and generally give them 5000 shares a year later. Employees recruited through social recruitment are not the same, they may give them 10000-20000 shares after working for a year.
4. How will the employee fund payment for shares?
On March 31, 2012, the Huawei board secretariat made it clear that after 2012, the restricted shares of the virtual limited liability company can only be purchased through self-raised funds. The bank will no longer provide the necessary loans to purchase the shares.
5. Will the company provide financial assistance?
No, it wouldn’t. From 2001 to 2012, employees borrowed money from the bank in the name of their own company.
6. Are the rewards allocated fairly and equally in your organization? How?
The first is efficiency in Huawei, Huawei from the reporting system into a share-based system. The most energetic motivation is more work and more. In the premise of efficiency, and then consider the fair.
7. Do you think that Employee Stock Ownership Plan is efficient? (I.e. rewards are leading to wanted behaviour)
Huawei advocates combining the community of interests among customers, employees and collaborators and strives to explore the internal dynamics of distribution according to factors of production.
Employee stock ownership plan, on the one hand, make a positive return to good staff. On the other hand, will continue to bring the most responsible and talented people into the company's management.
8. Are the employees fully aware of what is requested from them in order to receive a reward?
Yes, all employees know how to get rewarded. Generally based on employee job rankings, quarterly performance, qualifications and other factors to carry out the number of shares to be distributed.
9. How does the rewarding policy differ from other organizations?
Compared with ZTE (Zhongxing Telecom Equipment), Huawei employees held shares only as a basis for dividends and almost most employees have the opportunity to obtain such shares. However, the main motivators for ZTE are outstanding employees and R & D personnel.
10. In your opinion, do you think that Employee Stock Ownership Plan could be improved in the future? If yes, how improved the Employee Stock Ownership Plan?
1. Huawei can draw on the experience of other countries and introduce tax concessions for the employee stock ownership plan to ensure the effectiveness and diversity of employee stock ownership.
2. Standardize employee stock ownership plan operation process
To exert the maximum incentive effect of the Employee Stock Ownership Plan, the enterprise must formulate the process of registration, management, bonus, repurchase and withdrawal of employee stock ownership. Formulation of specific operational procedures, such as the timing of acquisition of shares and the public holding of shares;
3. The source of funding was abolished to open up new financing channels. One of the reasons for the difficulty in Huawei's shareholding scheme is that the employee's stock purchase source cannot afford the huge capital needs of the enterprise based solely on the employee's salary and dividends.
Sam1994
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