Join the company 1 month and get options worth more than 200 million yuan. 70% of pharmaceutical companies in science and technology innovation board rely on this move to "grab people".

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Join the company 1 month and get options worth more than 200 million yuan. 70% of pharmaceutical companies in science and technology innovation board rely on this move to "grab people".

The competition in the pharmaceutical industry is becoming more and more fierce. In order to successfully seize and retain high-quality talents, the ability of "counting money" of pharmaceutical companies has almost reached full capacity. Whether it is biotechnology in the initial stage, biopharmaceuticals in the rapid expansion stage, or even BigPharma in the mature stage, equity incentive is becoming a "standard" means for biopharmaceutical enterprises to build and stabilize their own talent teams in addition to high salaries.

With the intensification of the flow of high-end talents in the pharmaceutical industry, what do pharmaceutical companies want to recruit and retain talents?

Prospect and "Qian Jing".

As an innovative pharmaceutical enterprise with high threshold and long-term industry, its core competitiveness is highly dependent on the innovation of talents. Therefore, an efficient and stable R&D team is very important to maintain its own innovation for a long time.

The competition among innovative R&D pharmaceutical enterprises is, in the final analysis, the competition for talents. In the fierce involution environment, simple high salary is no longer the gold standard of "robbing people".

Compared with traditional methods such as salary, bonus and performance, equity incentive is more like a new secret weapon. "Now almost all innovative pharmaceutical companies will provide equity incentives in high-end talent recruitment." A person in charge of a pharmaceutical headhunting company told the e-medicine manager that this model, which has gradually become a normal incentive in innovative pharmaceutical companies, plays a role in "stabilizing" talents.

Behind 0121100,000 yuan equity incentive

Zou Jianjun, the former chief medical officer of Hengrui, who just joined Junshi's "Full Moon", recently appeared in the "List of Main Authorized Executives of the Draft Restricted Stock Incentive Plan for 2022" published by Junshi.

As the deputy general manager of Junshi Bio and the president of global R&D, the number of restricted shares to be granted by Zou Jianjun in this equity incentive plan is 3 million shares, and the stock incentive price of the incentive plan is 70 yuan/share, which is 78.6% of the closing price of the Science and Technology Innovation Board on the day of Junshi Bio's announcement (May 25th).

According to the rules, the restricted shares granted for the first time will be granted in three phases from the date of grant 12 months later, with the grant ratio of 40%, 30% and 30% respectively. The reserved restricted shares shall be granted in two phases from the date of granting some reserved restricted shares/0/2 months after KLOC, and the grant ratio shall be 50% and 50% respectively.

Of course, there is no free lunch in the world, and equity incentives generally set financial performance indicators as incentives. Shi Jun is no exception.

If Zou Jianjun wants to unlock the incentive stock smoothly, the exercise conditions are that the accumulated operating income of Junshi Bio in 2020 -2022 is not less than 6.6 billion yuan, the accumulated operating income in 2020 -2023 is not less than10/billion yuan, and the accumulated operating income in 2020 -2024 is not less than15/kloc-0.

It is not difficult to calculate the performance target set by Junshi Bio for the next three years from the exercise conditions.

In the past two years (2020 and 20021year), Junshi's revenue was 65.438+59.5 million yuan and 4.025 billion yuan respectively. Based on this calculation, the income in 2022 is not less than 980 million yuan, in 2023 it is not less than 3.5 billion yuan, and in 2024 it is not less than 5 billion yuan.

Indeed, equity incentive has the dual attributes of "explicit performance assessment" and "implicit market value assessment".

Hengshan Consulting, an industry consulting organization, believes that on the one hand, there are corresponding performance indicators in the equity incentive plan, which is helpful to promote the incentive object to create intrinsic value to the maximum extent. On the other hand, the income of the incentive object is linked to the degree of market value growth, which helps to enhance the incentive object's concern about the transformation of the company's intrinsic value to market value.

Futu ESOP research also shows that equity incentive has a small but significant positive effect on company performance, and the average performance of companies that implement equity incentive plan is about 4%-5% higher than originally expected. In addition, investors usually give a positive market response to the equity incentive plan, which is interpreted as a positive for the management to have confidence in the company's future development.

Pay equal attention to constraints and incentives.

Whether it is a small and beautiful biotechnology, a biopharmaceutical that is becoming bigger and stronger, or even a mature bigpharma, equity incentive is becoming a normal means to improve corporate governance and governance capabilities.

According to the statistics of Futu employee stock ownership plan, biopharmaceutical enterprises listed in Hong Kong stocks after August 2065438+2008 all implemented equity incentive or related equity incentive disclosure before listing. Since science and technology innovation board officially opened its board in July, 20 19, by the end of 200219, there were 76 biomedical enterprises listed in science and technology innovation board (28 in 2020 and 34 in 2002 14).

For biomedical companies that regard R&D as their lifeblood, equity incentive is an important means to retain key talents. China Entrepreneur Value Report (202 1) points out that equity incentive is a luxury for traditional industries, but it is already a necessity for innovative enterprises with intensive hard technology and human capital.

As the only pharmaceutical company listed in three places, Baekje Shenzhou's employee equity incentive plan is perfect. In the prospectus issued before 20021landing on the science and technology innovation board, Baekje described in detail the equity incentive plan carried out by the company for more than ten years. According to the incomplete statistics of E-Medicine Manager, as of June 20021,Baekje Shenzhou has completed or is implementing four equity incentive plans, namely, 201option plan, 20 16 option and incentive plan and 20 18 employee stock purchase plan.

20 1 1, 20 16, 20 18. From the year nodes set by these plans, it is not difficult to find clues between Baekje's equity incentive scheme and the company's development.

Baekje was founded on 20 10 and 10, and released the option plan on 20 1 1 six months after its establishment. For unlisted start-ups, equity incentive is a means to retain talents. After February 2, 20 16 (that is, the 20 16 option and incentive plan came into effect), Baekje announced that it would not grant any further options under the 20 1 1 option plan. From 20 1 1 to 20 15, Baekje awarded144.82 million ordinary shares to key management personnel in order to retain and motivate talents.

When time came to the next important node of Baekje's development-on the eve of listing on Nasdaq, the "20 16 Option and Incentive Plan" was announced, and the startup company came to the crossroads of IPO. At this time, Baekje is in a critical period of rapid growth and drug research and development, so it is very important to maintain a stable talent structure. Equity incentive plan covers almost all employees of the company from the original key management personnel, such as senior staff, employees, non-employee directors and other key personnel (including consultants), and the incentive methods and tools are gradually diversified, including granting company stock options, stock appreciation rights, restricted stocks, restricted stock units, unrestricted stocks, performance stock awards, cash awards, dividends and other incentive tools.

Since then, Baekje has issued the "20 18 employee stock purchase plan", which allows eligible employees to choose to buy company shares at 1%- 10% of their salary, and the purchase price is 15% of the company's ADS market price during the grant period.

More notably, before 20 18, Baekje announced the "20 18 equity incentive plan" and reserved120,000 shares of common stock, which will be granted to individuals who are not employed by the company or its subsidiaries. Obviously, this is a big move for Baekje to attract and recruit top talents in the world.

However, everything has two sides. Equity incentive is indeed a long-term incentive mechanism for enterprises to encourage and retain core talents, but the "pie" also fails from time to time. Due to the poor performance of the company, the R&D process was blocked, and the stock price plummeted, which made the equity incentive originally a bonus seriously shrink, and even the price of equity incentive was much higher than the current price in the secondary market. In addition, some companies set the exercise conditions as "difficult" performance targets, making equity incentives a blank check. The research of securities firms shows that it often takes several years to implement equity incentive, and there are many variables in this process, such as substandard performance, secondary market impact, policy changes, etc., which may lead to the termination of equity incentive scheme.

At the same time, equity incentive is also one of the effective "throttling" means for biomedical companies in the case of tight cash flow.

Yu Wang, deputy general manager of Tailin Investment, calculated such an account. Judging from the monetary fund and the total amount of the three fees, it is difficult for the operating cash flow of 35 Hong Kong listed biotechnology companies to turn from negative to positive in the next three to five years. The average cash flow that can support the three fees operation is 3.04 years, and the median value is even shorter, which can only last for 2.39 years.

Obviously, for biomedical enterprises lacking cash flow support, equity incentive can not only deeply "bind" high-end talents, but also avoid consuming cash flow too quickly because of excessive salary, and successfully survive this capital winter.

References:

1.ESOP (equity incentive) What is equity incentive? /s/mYs0PRLTi8dl6uBOmhnt0Q

2. China Entrepreneur Value Report (202 1)

3 Baekje Shenzhou Technology Innovation Board Listing Prospectus