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"From employee to partner", equity incentives of listed companies have expanded significantly since the beginning of this year.

As a market-oriented medium- and long-term incentive method, equity incentives are conducive to fully mobilizing the enthusiasm of core talents and enhancing corporate vitality and competitiveness. Therefore, more and more companies choose to include more employees in equity incentive plans to better achieve the goals of full employee incentives and long-term incentives.

The "14th Five-Year Plan" also proposes to improve the market-oriented salary distribution mechanism and flexibly carry out various forms of medium- and long-term incentives. According to data from Tonghuashun, as of the end of July this year, a total of 465 A-share listed companies disclosed equity incentive plans, 32 more than the 433 companies in the same period last year, which is a slight increase.

In terms of activity, since the GEM and STAR Market are mostly science and technology innovation enterprises with a high demand and dependence on talent, they are more active in equity incentive practices, while main board listed companies are slightly inferior.

The number of state-owned enterprises decreased by 25% year-on-year

In recent years, the heads of the SASAC have repeatedly stressed the need to further improve market-oriented operating mechanisms and support more state-owned enterprises in using medium- and long-term incentive policies such as equity incentives for state-controlled listed companies and equity and dividend incentives for state-owned technology companies to continuously unleash development vitality.

According to data from Tonghuashun, from January to July 2024, a total of 36 listed local state-owned enterprises and central enterprises disclosed equity incentive plans, a decrease of 25% from the same period last year. Among them, there are 9 companies in Guangdong Province, 5 in Jiangsu Province, and 4 in Shanghai. The three provinces and cities have the largest number of companies, totaling 18, accounting for 50%.

Data source: Tonghuashun iFinD, as of July 31

According to the implementation progress of the incentive plan, 24 companies have implemented the plan, 9 companies have approved the board of directors' plan, 2 companies have approved it at the shareholders' meeting, and only Medi Technology has stopped implementing the incentive plan.

Meditech explained that it has been a long time since the incentive plan was reviewed by the board of directors, and the domestic and international market environment has changed significantly. The original assessment targets have lost their timeliness. If the relevant incentive plan is continued to be implemented, it will be difficult to achieve the incentive purpose and effect expected by the original plan. Therefore, it was decided to terminate the equity incentive plan and the relevant assessment management measures at the same time.

It is worth noting that among the 36 state-owned enterprises that have disclosed equity incentive plans, the top three with the largest number of incentive targets are China Micro Corporation, Angel Yeast and Shengyi Technology, with 1,798, 1,006 and 733 targets respectively.

From the perspective of the number of shares granted, the top three companies with the largest number of shares granted to incentive targets are Huatie Emergency, Autejia and Shengyi Technology, with 98.9 million shares, 97.29 million shares and 58.9389 million shares, accounting for 5.04%, 3.00% and 2.50% of the company's total share capital respectively; the top three companies with the least number of shares granted to incentive targets are Dong-E-Ephedrine, Metro Design and Guoke Military Industry, with 1.5123 million shares, 3.5922 million shares and 3.6 million shares, accounting for 0.23%, 0.89% and 2.05% of the company's total share capital respectively.

The number of shares initially granted in equity incentives determines to a certain extent the economic benefits and future value-added potential obtained by the incentive recipients. Therefore, among the 36 state-owned enterprises, 20 had initial equity grants of more than 10 million shares. Among them, China Railway Emergency had the highest number of 98.9 million shares, followed by Auteco with 91.41 million shares.

360 companies have implemented incentive plans

According to data from 10JQ, in the first seven months of this year, there were 429 companies, including private, joint venture, and collective companies, that disclosed equity incentive plans.

From an industry perspective, the top three industries with the largest proportion of companies disclosing equity incentive plans are electronics, computers, and pharmaceuticals and biology, with 88, 45, and 38 companies, accounting for 21%, 10.4%, and 8.9%, respectively. From an analysis perspective, the industry data is in line with the basic logic of equity incentives. The more innovative a company is, the more it needs core technology and core talent. The degree of reliance on talent leads to a greater willingness to retain and attract talent through equity incentives.

According to the implementation progress of the incentive plan, 360 companies have implemented the plan, 23 companies have approved the board of directors' plan, 10 companies have approved the shareholders' meeting, 4 companies have failed to pass the incentive plan review, and 32 companies have stopped implementing the incentive plan.

Also looking at the number of incentive targets, among the 429 companies, the top three with the largest number of incentive targets are Sangfor, Haida Group and Huatian Technology, with 4,357, 3,655 and 2,728 targets respectively. Compared with state-owned enterprises, this data has increased significantly.

From the perspective of the number of shares granted, the top three companies with the largest number of shares granted to incentive targets are Huatian Technology, Lingyi Intelligent Manufacturing and *ST Jinglan, with 246.1 million shares, 238 million shares and 219.95 million shares, accounting for 7.68%, 3.40% and 7.70% of the company's total share capital, respectively; the top three companies with the least number of shares granted to incentive targets are Stone Technology, Kanghong Pharmaceutical and Rockchip, with 54,000 shares, 100,000 shares and 150,000 shares, accounting for 0.04%, 0.01% and 0.04% of the company's total share capital, respectively.

In addition, among the 429 companies, there were four companies that granted equity for the first time in an amount of more than 100 million shares, namely Huatian Technology, *ST Jinglan, Lingyi Intelligent Manufacturing, and Zhuhai Zhongfu, with the amounts being 231.38 million shares, 219.95 million shares, 190.40 million shares, and 111.41 million shares, respectively.

It is worth noting that among the 429 companies that have disclosed equity incentive plans, there are 5 ST companies, namely ST Tianlong, ST Lingda, *ST Jinglan, ST Haoyuan, and *ST Navigation.

Data source: Tonghuashun iFinD, as of July 31

Among them, the companies that have successfully implemented the incentive plan are *ST Jinglan and *ST Navigation; ST Tianlong's incentive plan has been approved by the board of directors; ST Lingda and ST Haoyuan have stopped implementing the incentive plan. The number of incentive targets does not exceed 100.

In this regard, industry insiders believe that even if a company faces ST status, it is still necessary to improve its internal governance and incentive mechanism. As a long-term incentive mechanism, the equity incentive plan helps to combine the interests of shareholders, the company and the personal interests of the incentive targets, forming a mechanism of sharing interests and sharing risks, thereby pushing the company out of difficulties. It is of great significance for the company to improve its operating conditions and achieve sustainable development.

64 Zhejiang companies disclosed incentive plans

Focusing on local areas, in the first seven months of this year, a total of 64 listed companies in Zhejiang Province disclosed equity incentive plans, accounting for 13.76% of the total.

Among them, 52 companies have implemented the plan, 4 companies have passed the board of directors' plan, 3 companies have approved the shareholders' meeting, only Aotai Biopharma has failed the incentive plan review, and 4 companies have stopped implementing the incentive plan.

Regarding the reasons for the termination of the plan, Jimin Medical and Hangzhou Hi-Tech respectively stated that due to changes in the macroeconomic, capital market and industry operating environments, the company's stock prices have fluctuated greatly. If the incentive plan continues to be implemented, it will be difficult to achieve the expected incentive purpose and effect. Therefore, the company terminated the incentive plan and the relevant assessment management measures at the same time.

Tiger Pharmaceuticals and New Asia Process stated that since the company's operating conditions have changed significantly compared to when the incentive plan was formulated, there is a deviation between the company's expected operating conditions and the setting of the incentive plan's assessment indicators, so they decided to terminate the plan.

Among the 64 listed companies in Zhejiang, Sanhua Intelligent Control had the largest number of incentives, with 1,953 people and a total of 25.095 million shares granted; Huayang Racing had the least number of incentives, with three people and a total of 121,600 shares granted.

In addition, 12 companies granted more than 10 million shares for the first time, including Wangli Security, Yongtai Technology, Tiantie, Shuanglin, Peacebird, Xinlian Integration, Huace Film & TV, Sanhua Intelligent Control, Changchuan Technology, Wanxiang Qianchao, Huatie Emergency, and Huibo Yuntong. Among them, the highest amount was 98.9 million shares granted to Huatie Emergency.

It can be seen that whether it is the entire A-share market or Zhejiang listed companies, Huatie Emergency ranks first in terms of the number of equity granted for the first time.

Data source: Tonghuashun iFinD, as of July 31

It is worth mentioning that Tiantie Co., Ltd. implemented the incentive plan twice on March 27 and July 1. The number of people and the number of equity initially granted were 68 people and 79.3204 million shares and 70 people and 51.547 million shares, respectively, all of which have been implemented.

In general, Zhejiang listed companies have shown a high degree of activity and standardization in equity incentives. By granting incentives such as restricted stocks to specific employee groups, they stimulate employees' enthusiasm and creativity and promote the sustained growth of company performance. At the same time, companies also focus on closely linking equity incentives with company operations to ensure the incentive effect.