Espressif Technology launches the first equity incentive plan on the Science and Technology Innovation Board, and its share price soars

On September 24, Lexin Technology surged 12.90% in early trading, with each share closing at 188.55 yuan, and a total market value of 15.08 billion yuan.

It is understood that last night, Espressif Systems issued an announcement stating that in order to further establish and improve the company's long-term incentive mechanism and attract and retain outstanding talents, Espressif Systems has formulated the "Espressif Information Technology (Shanghai) Co., Ltd. 2019 Restricted Stock Incentive Plan (Draft)" in accordance with laws, regulations and the company's articles of association.

The announcement shows that this incentive plan intends to grant 292,800 restricted shares to the incentive targets. The target stocks involved are RMB A-share common stocks, accounting for approximately 0.366% of the company's total share capital of 80 million shares at the time of the announcement of this incentive plan.

The incentive tool used in this incentive plan is the second type of restricted stock. The incentive objects that meet the grant conditions of this incentive plan will receive the company's additional A-share common stock at the grant price in batches after meeting the corresponding vesting conditions. Such stocks will be registered with the Shanghai Branch of China Securities Depository and Clearing Co., Ltd. The restricted stocks granted to the incentive objects do not enjoy the company's shareholder rights before vesting, and the restricted stocks shall not be transferred, used for guarantee or debt repayment, etc. 

This incentive plan involves 21 incentive targets in total, accounting for 6.56% of the company's total number of 320 employees. The incentive targets are the company's senior management, core technical personnel, and other personnel that the board of directors believes need to be incentivized.

It is worth mentioning that the above incentive targets include some foreign employees. The reasons why Espressif Technology includes them in this incentive plan are: ① In order to realize the company's internationalization strategy, the company has laid out overseas markets early and established subsidiaries overseas to actively expand overseas business. Overseas business will be an important part of the company's future sustainable development; ② Foreign incentive targets are all technical talents, and they play an important role in the company's technological research and development, business expansion, etc.; ③ Equity incentives are a common incentive method used by overseas companies. Foreign employees are familiar with the salary model of cash salary plus equity incentives. Through this incentive plan, the construction and stability of the company's core talent team will be further promoted, which will contribute to the long-term development of the company.

According to their length of service, the incentive targets are divided into two categories: the first category includes employees who have worked in the company for more than one year, totaling 19 people; the second category includes employees who have worked in the company for less than one year, totaling 2 people.

The first type of incentive targets will be assessed on the operating income growth rate or gross profit growth rate in 2019, 2020, 2021 and 2022. The A-level target is based on the operating income or gross profit in 2018, and the corresponding annual operating income growth rate shall not be less than 30%, 69%, 119%, 185% respectively, or the corresponding annual gross profit growth rate shall not be less than 30%, 69%, 119%, 185% respectively; the B-level target operating income corresponding annual growth rate shall not be less than 25%, 56%, 95%, 144% respectively, or the corresponding annual gross profit growth rate shall not be less than 25%, 56%, 95%, 144% respectively.

The second type of incentive targets will be assessed on the operating income growth rate or gross profit growth rate in 2020, 2021, 2022 and 2023. The A-level target is based on the operating income or gross profit in 2018, and the corresponding annual operating income growth rate shall not be less than 69%, 119%, 185%, 271% respectively, or the corresponding annual gross profit growth rate shall not be less than 69%, 119%, 185%, 271% respectively; the B-level target operating income corresponding annual growth rate shall not be less than 56%, 95%, 144%, 205% respectively, or the corresponding annual gross profit growth rate shall not be less than 56%, 95%, 144%, 205% respectively. 

According to the requirements of Chinese accounting standards, the impact of the restricted stocks in this incentive plan on the accounting costs of each period is shown in the following table:

Espressif said that the company preliminarily estimated based on the current information that the amortization of restricted stock expenses will have some impact on the net profit of each year during the validity period. However, after the implementation of this restricted stock incentive plan, it will further enhance the cohesion of employees, team stability, and effectively stimulate the enthusiasm of the management team, thereby improving operating efficiency, reducing agency costs, and bringing higher operating performance and intrinsic value to the company.