Top of the Great Era

Chapter 3236 Reformer

In fact, many people have already mentioned to Zhou Buqi the changes in the salary system.

In particular, Tang Binchen, Xu Liangjie and Zheng Xiaoli all have doubts about the existing salary system of Ziweixing International.

At least it should be the same as Ziweixing!
However, Zhou Buqi was reluctant to agree to it for the sake of being conservative. In other words, he hoped to "kill with a borrowed knife" instead of going into battle himself, asking Chinese executives such as Tang Binchen or Xu Liangjie to solve the problem, which would make them offend others.

It would be best to let Kurian come forward!
Ziweixing and Ziweixing International adopt different remuneration systems, and the most core difference lies in the method of granting stocks.

Domestic Ziweixing adopts a unified "option system".

The overseas Ziweixing International adopts the "equity system + option system".

The option system is a subscription strategy.

For example, an employee signs a 4-year labor contract with 1 stock options. That is to say, when the contract is completed for 4 years, he can get the full 1 stock options.

These 1 options need to be exercised before they can actually become stocks that can be sold.

The key lies in the strategy of exercising the option.

To exercise an option is to buy low and sell high.

Four years ago, when he joined the company, the stock price was $100; four years later, when his contract expired, the stock price was $4.

In this way, he can exercise the option to purchase 100 shares at the price of $1 when he joined the company, spending a total of $100 million, but the actual stock value is $200 million.

It is equivalent to receiving a real incentive of 100 million US dollars.

If the stock price falls during the four-year period...

Then there is no value in exercising the option. You can't buy high and sell low, right?

Therefore, the underlying logic of the option system is to encourage employees to work hard, improve performance, and work together to improve performance, and then increase the stock price. Only when the stock price rises, the options will be valuable. If the performance is not good and the stock price falls, then everyone's interests will be damaged.

The equity-based compensation plan is also a stock reward, but it does not have an exercise mechanism.

That is, the labor contract will indicate that stocks will be directly issued to employees. For example, for a 4-year contract, 1 shares will be awarded. In this case, employees do not need to spend money to exercise their rights. As long as the contract expires, employees can get these 1 shares.

Regardless of whether the stock price rises or falls sharply, employees can safely get these 1 shares.

This motivational attribute is much weaker.

Even if the performance is very poor and the stock price plummets, employees can still get stocks. If there is a lack of a "prosperity-sharing" relationship between the company and employees, the incentive effect on performance will be very poor.

in the country, Ziweixing adopts option incentives.

Ziweixing International is different. Most of the incentives are options, but some executives, middle-level and senior scientists use equity incentives.

Because for employees, they prefer equity incentives.

You can get the stocks safely without taking performance risks.

In short, the option system is more in line with the interests of the company, while the equity system is more in line with the interests of employees.

If you want to attract some of the industry's top talents, it is better to adopt an equity system.

Ziweixing is the first choice for domestic talents, so the option system is OK. Ziweixing International is not so attractive in Silicon Valley, so it has to partially adopt the equity system.

Kurian is a new CEO.

That would definitely require three fires.

Kurian said in a deep voice: "In the past few years, Ziweixing International was just a start-up company. It was difficult to compete for talent with technology giants such as Microsoft, Apple, Google, Amazon, and Oracle. Therefore, in the recruitment of some outstanding talents, we can only adopt the equity system. This strategy is correct, which can effectively attract a group of top industry talents for the company."

Zhou Buqi smiled and said, "What is your compensation plan? Options or equity?"

"Equity." Kurian jumped from Oracle. In order to attract him to join, in addition to career ideals, the salary should not be vague. "Although I got equity incentives, this does not prove that equity incentives are the most suitable method now."

Zhou Buqi nodded, "Well, now Ziweixing International is already a giant in the industry. I looked at the market value rankings, Apple's market value is 7600 billion US dollars, Google's market value is 3800 billion US dollars, Microsoft's market value is 3200 billion US dollars, and Ziweixing's market value is 2900 billion US dollars. Then there is Ziweixing International, with 2500 billion US dollars, which is the fifth in the world in the Internet industry."

Kurian said: "Yes, we are already a world-class company. Our attraction to talent is comparable to giants such as Apple, Microsoft, Google, and Amazon. However, our salary system is still at the stage of a startup. Now Ziweixing International is a large listed company, and we need to make timely adjustments to the salary structure."

This was the reform that Zhou Buqi had long been looking forward to.

We are just waiting for Kurian to take office and put the responsibility of this reform on him.

Any reform will offend people.

It's all written in history books.

Reformers were beheaded in large numbers, and were beheaded at any time. Some of the few who were not beheaded also suffered after death. For example, Wang Anshi was known as the most treacherous minister in the Song Dynasty; Zhang Juzheng was even opened his coffin and whipped, and his bones were crushed and scattered after his death.

Changing the equity system to an option system will inevitably offend a large number of senior executives.

This kind of thing is not suitable for Lu Qi, Xu Liangjie or Tang Binchen to do. It is most appropriate to let Indian people take the lead.

If Tang Binchen is appointed as CEO, it will be very dangerous, as it will be equivalent to Boss Zhou taking action personally; if Kurian is appointed as CEO, even if he messes up, Zhou Buqi can cover it and replace him with another CEO.

Unexpectedly, before Zhou Buqi put forward the reform request, Kurian took the initiative to volunteer.

What a qualified CEO!
Zhou Buqi thought for a moment and said slowly: "The current salary system is indeed unable to keep up with the company's development. However, reforms must be cautious and carried out slowly. Don't make drastic changes right away, so as not to cause too much backlash and cause unrest in the company's internal order." Kurian smiled and said: "Adjustments to the salary system are a good thing."

"A good thing is not necessarily a good reform." Zhou Buqi told him about history. "Reform is for getting better and better, not creating chaos. In the history of our country, there was a dynasty with a reformer named Wang Anshi. All his reform strategies are good from a modern perspective. But they were too radical for the situation at the time. After they were implemented, they caused great chaos in the country. He also reused a large number of corrupt officials who benefited from the reform, which directly led to foreign invasion. Both emperors were captured."

Kurian agreed. “I wouldn’t completely eliminate equity, which would be destabilizing. First, I wouldn’t go after the senior scientists, who are not held accountable for performance and whose contracts would always be equity-based.”

"it is good."

Zhou Buqi agreed very much.

Kurian went on to say, "Second, we need to separate the middle and senior management. All middle managers must have an option system. Anyone who disagrees will be fired. This method can clear out a group of low-spirited middle managers and inject new vitality into the company. The current situation in the company is that there are already a lot of laziness and slackness, and many people have slacked off. We must kill a group of people, a group of influential people, to boost morale."

"can."

Zhou Buqi was secretly surprised.

I think this Indian is pretty cool, and he seems to be well-versed in "Zizhi Tongjian". Could it be that India also has similar works on political strategy?

Kurian said: "Third, for the senior management, stability should be the priority. These excellent senior executives may receive calls from headhunters every day, and they don't have to worry about their next job. So we need to be more gentle with this group. We can't abolish the equity system across the board."

6◇9◇Book◇Bar

"how do you want to do it?"

"I think we can split the previous equity into two halves. One half will still be an equity system, and the other half will be an option system linked to performance. This plan will be smoother and will not have a big impact on the interests of senior executives."

"is it?"

Zhou Buqi is uncertain.

Kurian took out a document from a folder beside him and handed it over. "This is the new compensation plan. I think it is relatively smooth. I have also talked to some executives, and there is no obvious sign of rebound."

Zhou Buqi took the document.

This is a comparison of the old and new compensation plans.

In the past, executive compensation consisted mainly of three parts: fixed salary, annual bonus and equity incentives.

Fixed salary accounts for 7.6%.

Annual bonuses account for 19.4%.

Equity incentives account for 73%.

It can be seen from this that what executives earn in compensation is not salary, but stocks.

The new plan breaks down executive compensation into four parts, with fixed salary accounting for 7.6% and annual bonus accounting for 19.4%.

There is no change in this part of cash payment.

What changed was that the equity incentive, which accounted for 73% of the total package, was split into two.

36.5% of them are still equity incentives, and the remaining 36.5% are option incentives.

The changes are not that big.

Zhou Buqi looked at it for a minute and agreed, "Well, this plan is quite smooth."

Kurian said: "In the past, if the performance of executives was not good, they would lose their annual bonus and their total package income would be reduced by about 20%. In the new plan, if the performance is not up to standard, the total package income will be reduced by 56%, which is more than half. Although the change in the plan is small, the incentive effect of the new plan can be very obvious. A 20% reduction in annual income is nothing for the high-income class. But if it is reduced by half, many people may not even be able to pay their loan bills."

Zhou Buqi was very satisfied and said with a smile: "No problem on my side. What about the compensation committee? Have you discussed it?"

"That's the third thing I wanted to talk to you about."

"Oh?"

"Our chief financial officer doesn't support reform!"

Kurian couldn't help but sneer.

"Ok?"

Zhou Buqi raised his eyebrows.

The Chief Financial Officer, Curtis, is a white man in his fifties.

Kurian said in a resounding voice: "I want a new CFO!"

Zhou Buqi asked: "Who should I change?"

Kurian said: "Ms. Wormde, the financial director, I worked with her to develop this compensation plan. We need to appoint a financial officer who supports reform and focuses on the long-term interests of the company, rather than a selfish person who only cares about his own interests."

"can!"

Zhou Buqi returned the favor.

This book has one last chapter and then it ends.

The new book "After Rebirth, I Became a Great Master" has been released. The protagonist changed from Boss Zhou to Mr. Zhou. Back to 1996, the Internet had not yet emerged, so we started with TV stations.