What Is an Employee Savings Plan?
In the long-term incentives of Western companies, in addition to the above basic stock option methods, there are other long-term incentive methods, that is, derivatives of stock options. The basic types are as follows: savings participation stock plan, stock holding plan and specific target funding plan. [1]
Savings Participation in Stock Plans
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- Chinese name
- Savings Participation in Stock Plans
- Foreign name
- Savings in the stock plan
- Solid
- Long-term incentive
- Features
- Basic stock options
- In the long-term incentives of Western companies, in addition to the above basic stock option methods, there are other long-term incentive methods, that is, derivatives of stock options. The basic types are as follows: savings participation stock plan, stock holding plan and specific target funding plan. [1]
- Savings participation in the stock plan is an incentive to provide all employees with the opportunity to share the company's potential earnings in order to attract and retain high-quality talent. This method allows employees to buy the company's stock twice a year at a price below the market price. [1]
- The source of this kind of funds is a reward form for the company to share the company's growth income with all employees, which is characterized by employees' participation in the savings plan in order to share the income. It applies to all employees except senior management.
- Comment
- During the implementation process, employees are first required to put a certain percentage of the monthly basic salary into a savings account established by the company for employees, and set a specific period (such as two years) as one period. The percentage stipulated by the general company is 2% -10% of the pre-tax salary, and the maximum percentage stipulated by a few companies can reach 20%. [1]
- In this scheme, the income of the equity incentive object is the difference between the net assets per share of the company at the beginning of the equity participation plan period and the net assets per share at maturity. The risk of the equity incentive object is that when the net assets per share at the end of the period is lower than the net assets per share at the beginning of the period, the employee can only recover the principal, but will lose interest.
- Compared with stock options, savings participation in a stock plan is more like a savings plan with less incentive. Because the stock option plan is profitable when the stock price rises, there is no gain when the dividend is unchanged or falling; whether the savings participate in the stock plan will have a certain benefit whether the stock price rises or falls, and the stock price will be more profitable. [1]