Although equity incentives bring a lot of troubles to founders, equity incentives and the Internet, as "imports" in the same period, play a positive role in attracting and stabilizing talents and enhancing market competitiveness. it has greatly promoted the vigorous development of the Internet industry. According to a survey by PricewaterhouseCoopers, equity incentive has become a standard for most new economy enterprises. Of the 337 Chinese companies listed on US and Hong Kong stocks from January 2016 to July 201940% of enterprises have done equity incentive before listing, and 52% of enterprises have done equity incentive after listing.If enterprises want to achieve high-speed and stable development, how to improve the effect of equity incentive has become an important issue.

Experience the joy and pain of equity incentiveEventually become a subversive service provider.

Li Hua, founder and CEO of Fortune, has rich experience in equity incentive.Over the past 20 years, he has experienced three roles of equity incentive: grantee, grantee and service provider.

As the 18th employee of Tencent, Li Hua realized the "charm" of option incentive as a result of the growth of the company. After Tencent left, he founded Futu, an Internet brokerage in US stocks and Hong Kong stocks, and also used options to encourage employees, during which he suffered a lot because of equity incentives. In 2015, Fortune began to explore employee equity incentive (ESOP) products, and Li Hua became a service provider of equity incentive programs.

Up to now, Futu ESOP has served more than 200 new economy enterprises, including Tencent, KE Holdings Inc., Kuaishou Technology, Pop Mart International, MINISO Group, XPeng Inc., Vipshop Holdings Limited, Ming Yuan Cloud Group, China Gas and other industry leading enterprises, and has accumulated the experience of hundreds of thousands of people exercising their rights.In the past three years, more than 78 per cent of the top New economy companies listed in the US with a market capitalization of more than $3 billion are ESOP customers of Fortune and continue to lead the equity incentive solutions industry.

Compared with the traditional suppliers of more than a hundred enterprises who have been in China for more than ten years and have served customers accumulatively, Futu is a leader from behind. Why is Futu ESOP favored by the leading enterprises in the industry? In improving the effect of equity incentive, what is the difference between Futu ESOP?

In Li Hua's opinion,The biggest difference of Futu ESOP is that it really solves the pain points in the whole process of equity incentive and provides a subversive equity incentive experience for enterprises.

Equity incentive, as a systematic project that runs through the whole life cycle of an enterprise, can be divided into four golden processes from establishment to listing: scheme design, trust tax, data management, and exercise. In order to achieve the desired incentive effect, none of the four processes can be dropped. However, the expertise involved includes human resources, taxation, law, finance, project management and so on. It is not only difficult for enterprises to have a "helm" who is proficient in equity incentives, but also there are no service providers in the industry who can cover the whole process.

"the most common situation is that the project team does not have a 'general schedule' for the pace of implementation, resulting in the ESOP project cycle being too long, missing key points, and making the employee experience worse, not only not motivating, but complaining about the company. Fan Wei, head of operations at Futu ESOP, said she had come into contact with a large number of CFO and HRD at different stages of the company.

The subversion of Fu Tu ESOP is reflected in that every time he comes into contact with an enterprise, Fu Tu first plays the role of PMO (Project Management Manager).Provide the enterprise with a global vision, do project planning, and then solve the current and future pain points according to the stage of the enterprise, with the ultimate goal of improving the effect and experience of equity incentive.

The mainstream approach in the industry is to focus on solving the pain points of a certain link of equity incentive, such as consulting companies focused on scheme design, software / SaaS companies focused on data management, and traditional securities firms that focus on exercise docking data management but weak data management, it is inevitable that there are service blind spots, which can not fundamentally improve the effect and experience of equity incentive.

After communicating with Zhang Senhong for the first time, Fan Wei listed the detailed "To do list": 1) make an appointment with experts in equity incentive schemes to improve the adjustment and exit mechanism of existing incentive schemes; 2) invite experts and lawyers to assist in the buyback or stock expansion to supplement the option pool; 3) set up a management system to complete the visualization of option pool 4) make the overall project planning table to prepare for the ownership, exercise, tax collection and transaction of the company after entering the Pre-IPO stage / listing.

With the help of expert lawyers, Zhang Senhong bought back some of the shares held by his partners at a reasonable price, which was mainly reserved as an option pool, and the supplement of the option pool also solved his problem of recruiting key talents.Through the Futu ESOP system, not only Zhang Senhong can clearly grasp the grant and ownership of the option pool, but also employees can view their options in multiple terminals and master the "value", and the "black box" has been completely broken.

In the future, Zhang Senhong's pre-listing tax related, trust establishment, to post-listing exercise / ownership, personal tax withholding, foreign exchange reporting, and stock sale, Futu ESOP has achieved the coverage of the whole process, while supporting options, restricted stock (RSU) and other incentive tools and flexible exercise methods.

In order to continuously optimize the experience of enterprises and employees, Futu also provides value-added services that are not involved by traditional suppliers, such as conducting exercise trading training for employees to alleviate the consulting pressure of the surge of HR team during the listing period, and provide a variety of financial solutions to alleviate the large cash needs of executives in the short term. For executive exercise reduction, Futu has a professional trading team to formulate bulk trading strategies to smooth share price fluctuations that may be brought about by bulk trading, which has helped a number of companies to achieve large holdings smoothly.

Full-process service is easy to say, but very difficult to implement. In the process of implementing equity incentive, the pain points and difficulties of each of the four processes are different, and the requirements for the reserve of professionals are different, but Li Hua, who has experienced the joy and pain of equity incentive, knows very well.The equity incentive solution of the whole process can really improve the incentive effect for the enterprise, which is the "right and difficult thing" that must be adhered to.

Cut in from data managementComplete one-stop service closed loop

It is not easy for any outsider to achieve industry change, and the process of achieving a closed-loop business is fraught with challenges.

Li Hua initially found that the demand for ESOP stems from the fact that after Fortune was established, many of Tencent's employees became users of Fortis, hoping to transfer the granted options to Fortune's system.The persistence of this demand makes Li Hua realize that there is a close relationship between equity incentive management and Futu business.

The first opportunity came quickly. In 2016, on the 18th anniversary of Tencent, 300 Tencent commemorative shares were issued to each of the more than 20, 000 employees, resulting in a sharp increase in management complexity. The original equity incentive management method is no longer applicable. Tencent's Ministry of compensation and Welfare wanted to have more efficient tools for management, and Futu finally cut into the ESOP business from assisting in the reception and data management of the memorial unit. Li Hua said.

In terms of employee equity incentives, Tencent has created many precedents in China's Internet industry, with a large number of incentives, a high amount of incentives and multiple incentive tools, which are rare. This also means that the demand for Tencent's products and services is extremely complex, which is a great challenge for service providers.

If Fu Tu wants to become a custodian of Tencent's equity incentive plan, it is far from enough to manage the data of commemorative stocks and receive stocks after tax payment.It is bound to gnaw off the hard bones of option data management and exercise landing docking, optimize the employee experience and reduce the operating costs of the enterprise.

Under the repeated collisions with Tencent's compensation department, Futu completed a large-scale and highly complex option incentive plan product demand carding, and through continuous testing and polishing, took the lead in landing these scarce awareness on the products.

This set of ESOP management system finally went through layers of tests and completed the joint acceptance of Tencent. Tencent's salary and benefits team also won an award in Tencent because of this joint project with Futu, user experience first and employee service first. Fortune's ESOP business officially set sail from the giant's shoulder.

In the practice of follow-up service for KE Holdings Inc., Kuaishou Technology, Pop Mart International, MINISO Group, XPeng Inc., Vipshop Holdings Limited, Ming Yuan Cloud Group, China Gas and other enterprises, Futu's system functions and services have been innovated repeatedly in the industry.Including stock trading management, authority classification, online signing, fiscal and tax report processing, online approval process and so on.

Among them, the stock trading management function of the Futu ESOP system, under the premise of consultation and agreement between the company and employees, can help enterprises manage the rhythm of stock sales and prevent smashing of small-cap stocks due to centralized sales. after the launch of this function, the industry is scrambling to follow suit.

At present, the system has supported the development of many kinds of reports and customized reports, such as tax report, foreign exchange settlement report, SBC report, etc., and can generate simple financial reports with one click, which greatly improves the work efficiency of the financial team. In the face of extremely complex financial data, Futu will also arrange a professional financial team to assist enterprises in sorting out the reports.

After several years of product polishing and market scale verification, Futu has gradually formed a business closed loop with data management system and securities firm docking as a starting point: providing consulting services for scheme design and diagnosis for early and mid-term enterprises; for Pre-IPO stage / listing, providing equity incentive staff training, tax planning, trust establishment, foreign exchange reporting, personal tax withholding, enforcement landing and other services. In May 2019, FUTU officially launched the enterprise service brand "Fortuo comfort E". One-stop ESOP solution is one of the core businesses.

Continue to take the lead with the help of three core competencies

In several customer visits and investigations, Fan Wei summed up the feedback from CFO and HRD.The three abilities of Futu ESOP, which are most valued by the head enterprises, are the basic service capability of securities firms, qualification compliance and safety, and practical experience.

1. The basic service capacity of securities firms.The stock market is rapidly changing, so the node where the order is issued is very important. However, the market of US stock and Hong Kong stock brokerages that traditionally exercise the right is refreshed in minutes, and the execution of the exercise across the two systems is sometimes as long as 15 minutes.

Futu Niuniu, the trading platform of Futu, not only has the real-time quotes of the first and second levels of US stocks and Hong Kong stocks, the system takes only 0.0037 seconds to process an order request to issue an order successfully, which greatly improves the trading efficiency and exercise experience of employees. Real-time quotations and high-quality trading experience have brought together 14 million users and 1.42 million of account-opening customers, becoming the top Internet brokerages in US stocks and Hong Kong stocks.

2. Qualification, compliance and safety.The qualification compliance and data security of service providers are particularly important to the ESOP management of enterprises. There are two dimensional reasons.On the one hand, the output of equity incentives is large, involving the company's senior executives and core employees, leading to mobilize the whole body, it is necessary to find a formal brokerage license service provider.Futu's wholly-owned subsidiaries have brokerage licenses in Hong Kong, the United States and Singapore. In Hong Kong, they have won the Hong Kong Securities Regulatory Commission (SFC) Class 1 / 2 Financial licence, Hong Kong Securities Regulatory Commission (SFC) Financial licence Class 1 / 2, Bank of Hong Kong Securities Regulatory Commission (SFC) Class 3, Bank of Hong Kong, Class 4, Bank, and Class 7, Class 9 financial licenses, and seven of the 10 types of common SFC licences. Compared with the service providers with incomplete qualifications and low gold content, it can better protect the assets of enterprises.

On the other hand, the incentive situation of the company belongs to the core data, which will do great harm to the normal operation of the company once leaked.Before the Fu Tu comfortable ESOP system was officially put into use, it took two months to conduct tens of thousands of data simulation tests and design dozens of use scenarios. Tencent's security technicians also went to Fu Tu for a week of security inspection and finally passed the acceptance test smoothly. In August 2020, Futu ESOP took the lead in obtaining the world's highest-level privacy information management system ISO27701 report and ISO29151 report in the industry.

3. Practical experience.What the Fu Tu ESOP team has is not only the actual combat experience of more than 200 times and the landing experience of hundreds of thousands of people. A large number of Futu service customers are industry leaders, which means that Futu ESOP team has been solving complex problems, and the accumulated industry experience is difficult for other teams to match.

「Lack of money, talent and resources are inevitable challenges in the process of starting a business.By granting economic rights in the form of options and stocks to senior executives and employees, companies can attract high-end talents, let enterprises and employees share corporate growth dividends, and at the same time alleviate the periodic cash pressure of enterprises. Wu Biwei, senior partner and president of financial and corporate services, believes thatThe advantages that equity incentives bring to high-growth enterprises will certainly make equity incentives more popular.

For trendsetters like Fortune, this is an excellent dividend of the times. Wu Biwei firmly believes that the next milestone after the Futu 200 order will come soon.