How much do Internet companies generally give options?

Options were originally designed solely to avoid taxes.

In the 1920s, the United States first proposed the concept of equity incentives. At that time, World War I had just ended, and the United States entered a period of great economic prosperity. Then the Great Depression came, and the economic crisis lasted until the early 1950s. The U.S. Congress gave preferential tax policies for stock options. In order to avoid taxes for executives, the American Fizer Corporation In 1952 the first stock option plan was launched.

After the stock price trough in the 1970s, the stock option system became popular again in the 1980s. Shareholders are angry that executives with mediocre performance can still receive high compensation, and hope to control excessive executive compensation through options, binding the stock price of listed companies to the future income of executives.

But this system was soon played to the applause by executives of listed companies. Executives set the lowest point of the stock price as their perfect payday to ensure that the exercise price is low enough and the difference between the stock price and the exercise price when the option is exercised is large enough. This turns the options system into a stuck ATM machine, spitting out money continuously.

The infamous Enron incident is also inseparable from option incentives. In order to maintain a high stock price, Enron’s management teamed up with an accounting firm to make false accounts and fabricated most of the company’s income. Before the explosion, the chairman of Enron’s board of directors, Sold over $100 million in vested options.

After the Enron scandal in the early 21st century, restricted stocks replaced options and became the mainstream incentive tool for more listed companies. Employees need to achieve specific performance goals in order to benefit from selling restricted stocks at a specific price in the future. . The price of restricted stocks is generally higher than the exercise price, and the income obtained is the difference between the agreed stock price and the exercise price, which will not fluctuate with the stock price.

This means that compared to options, restricted stocks carry less risk, but the possibility of winning the jackpot because the stock price soars is gone. However, this also avoids situations like Enron where executives pursue high returns and manipulate stock prices.

For unlisted companies, options remain the currency of cash-strapped startups. In the past ten years, the option system has undergone many changes, some of which are causing options to gradually deviate from its most valued meaning - motivating employees to bind themselves to the company for the long term and develop together.