Those Years When I Was Forced to Top the Forbes List

Chapter 384 Filling the Gaps
Silence fell in the room.

One thousand sets?

Chen Xuebing pondered for a moment, considering this year's talent needs, the establishment of the Singularity Technology Park, the expansion of various departments, the takeover of ARM, and Spreadtrum's formal entry into the telecommunications industry. He gradually made up his mind, stood up, and tapped the table beside him with his fingers, saying:

"Starting next year, Gu'an Construction will allocate 500 apartments in Shanghai and 500 apartments in Shenzhen each year for talent incentives!"

“The judging panel will select one thousand technical talents each year, and Singularity and Spreadtrum will provide down payments and solve housing problems for these people. Moreover, this number will increase every year as the company expands.”

Now, Wu Ping was in a bit of a dilemma: "President Chen, this is quite an expense, 500 apartments in Shanghai. How big are they?"

Chen Xuebing shook his head with his hands behind his back and said slowly:

"It can't be small; it has to guarantee the quality of life. We offer a variety of housing options, starting from 100 square meters and going up to 120 or 140 square meters. Don't worry, I'm not just making excuses to sell Gu An's houses. The price I'm giving you is definitely a bonus, 92% off the market price. This is an insider price that ordinary people absolutely cannot get."

"Your interest-free loan guarantee can also include options and betting features. The down payment loan will be recovered in your salary within five years. If you leave the company within five years or are dismissed due to misconduct, you will need to pay the down payment loan interest according to LPR, or return the house at the original purchase price. If you have worked for five years, you can enter the new company's stock option incentive plan."

"In this way, both companies can temporarily suspend the equity pressure of talent incentives and use real estate as options to retain a large number of talents that you need."

Wu Ping's eyes flickered.

Lin Huixiang had already picked up her computer and was busy calculating the accounts.

"A thousand units! Let's say 120 square meters. Even with an 8% subsidy, a 120-square-meter apartment in Anping or Huangpu would cost at least 200 million yuan, right? Assuming a 30% down payment, you'd need to subsidize 3 million yuan in loans just for the 500 units in Shanghai alone, and..."

“Each employee has to repay more than 11000 yuan in loans every month, plus a down payment installment of 600,000 yuan. Even if it's interest-free, they still have to repay 10,000 yuan every month. For the first five years, they would have to repay more than 20,000 yuan every month. Who can afford that? This is not a reward, it's pressure!”

She's been thinking about buying a house lately, and she knows all about bank interest rates and installment calculations.

Housing is expensive in Shanghai, and it's not cheap in Shenzhen either, with prices reaching 13,000 to 14,000 yuan per square meter.

Chen Xuebing laughed: "Then how can a young girl like you afford a house?"

“My family will give it to me,” Lin Huixiang said, blinking.

"Don't our employees have families? Do you really think families who can send their children to university in big cities don't have savings?" Chen Xuebing retorted.

Then he added, “In Shanghai and Shenzhen, buying a house requires a huge financial commitment, something ordinary families wouldn’t even dare to dream of. Property values ​​in both cities have been rising year after year; if you can’t afford it now, you’ll be even less able to afford it in the future. What we need is the support of our employees and their entire families, with their eyes fixed on this property. As long as property prices rise, employees won’t dare to quit. If they even have that idea, their whole family will oppose it. With the whole family invested, they can concentrate more on their work. The company can provide meals, avoiding unnecessary expenses. As for marriage, with a large house in a first-tier city, are you worried about not finding a partner?”

"In other words, if you really can't afford to buy, you can sell it. Interest-free loan opportunities can be bought and sold internally, allowing employees outside the top 1,000 to indirectly get the opportunity. The houses can also be sold to the outside after five years of lease maturity. If the house price drops, it can be sold back to the company at the original price. The houses that are taken back will be taken over by our company, Gu'an."

"For ordinary people, this is no longer a reward, but an opportunity to change their destiny. Just ask around and you'll know how many people want this opportunity."

“It’s going to be crazy,” Wu Ping asserted. “Many of our company’s employees are worried about buying a house right now, some of whom are even returning from overseas. But Mr. Chen, I think most people don’t have such high demands. It’s unnecessary to buy a house in the inner city, let alone such a big one. It’s also quite far from Zhangjiang.”

New apartments in Shanghai are currently mostly 70 or 90 square meters; apartments over 100 square meters are considered very large.

Chen Xuebing chuckled: "You don't understand real estate, and most of the employees don't either. If the location is out of the way, the price will rise slowly. We're building new types of housing, so we can add a bay window. It's not easy to build a small area. Don't worry about that. We're here to help everyone make money. These factors will be taken into consideration by our professional team. You're responsible for working with the employees and getting those who are interested to save some money. Once they buy a house, they should try not to sell it if possible. In two or three years, they will thank you."

The timing is set for next year when housing prices will be at their lowest point. In reality, a 120-square-meter apartment won't cost 2 million yuan at all, but at most around 1.6 million yuan. The first batch of people who buy houses will soon be able to enjoy the retaliatory price increases of several tens of percent following the 4 trillion yuan stimulus plan, and employee morale will soon be boosted.

In the following years, housing prices in Shanghai and Shenzhen continued to rise year after year. When the market was bad, they would at most stagnate or drop slightly. The 92% discount that employees received was enough to cover costs. When the market was good, people would buy even at market price plus a markup.

He can't say these things now, but we'll see the results in a year or two.

"Within five years, we will have thousands of outstanding employees living in large houses in Shanghai and Shenzhen. Coupled with the promotion of top-level super awards, all high-end technical talents will aim to join Singularity and Spreadtrum. In the future, we will no longer have to worry about talent issues."

When Chen Xuebing stated his conclusion, Wu Ping was actually quite certain of it as well.

Advance payment for housing and awards are attractive to both mid-to-high-end and absolute high-end talents.

"It just takes some money."

The annual housing subsidy of 300 million yuan is just a small amount for Spreadtrum nowadays, not much at all.

Lin Huixiang clicked her tongue and said, "If you calculate it this way, the real estate subsidy alone will be five or six hundred million, and the bonus will be another three hundred million. The annual subsidy will be close to one billion."

"Is a billion a lot?" Chen Xuebing laughed. "A few days ago, Mr. Cai from Alibaba chatted with me and said something like, 'Alibaba is growing rapidly.' I believe that our technology companies are also growing rapidly. In this process, we have to give up a lot of equity as a price. I think it would be better to change this approach. Within five years, we should not give up too much equity, but pay cash instead. This cash can be invested in real estate, which also has huge potential for appreciation. Let real estate help us increase the value of our employees."

He had been thinking about equity incentives for a long time, but he had been struggling with the issue. Today, he happened to combine the core anxieties of his employees with the issue of incentives.

Employees follow the company, and the company helps outstanding employees create huge wealth opportunities – this is a consensus among companies in the new era.

If this consensus is not reached, employees will become disloyal.

Almost all companies choose to issue stock options, but the cost is too high, and apart from companies like Huawei that raise funds internally, not many employees can enjoy equity opportunities.

Now, if we implement a five-year incentive plan through real estate, requiring only a few billion yuan in cash subsidies, and ten years later, the price of houses in Shanghai's inner city will be over 100,000 yuan per square meter, and in Shenzhen's inner city over 100,000 yuan per square meter, the initial cost of buying a house will be almost negligible. The two companies will then have thousands of millionaires.

The top technology award will create another 20 to 30 billionaires every ten years (they may receive the award multiple times).

Such incentives are more universally beneficial than equity. With an investment of only a few billion, almost all senior talents can benefit. To put it another way, other companies, even companies like Alibaba, would need to give up at least 40% of their equity to achieve the same effect of making all employees rich. This is because equity incentives are tiered; if you want some middle and lower-level employees to become millionaires, then senior employees would have to receive more.

For a trillion-dollar company, this amounts to hundreds of billions.

Moreover, real estate is tied to employee assets, which can prevent large-scale resignations caused by the departure of a few senior executives, greatly enhancing the company's stability.

Five years later, when both companies have substantial capital, they can issue more shares. A few percent of the equity can create twice as many millionaires. The company's incentive lifespan can be maintained healthily for at least twenty years. This is the long-term development that Chen Xuebing wants.

Wu Ping had also done the math in his mind.

The money for the top award came from General Manager Chen. Spreadtrum was actually just paying out five years' worth of employees' salaries in advance in a lump sum. This money will be recovered. Spreadtrum only paid a capital occupancy fee.

For employees, this is a very essential benefit. If we were to do a survey, at least 70% of employees would say that buying a house is their primary need.

Spreadtrum split its shares early on, and now with an increasing number of employees and the prospect of going public, its option pool is running out. To continue generating incentive plans, all shareholders need to agree to dilute their own shares to create a new option pool, which puts a lot of pressure on negotiating with shareholders.

By retaining employees in this way, there's no need to worry about equity issues, and shareholders should all agree.

There are three opportunities to become a billionaire every year, and the money is in cash rather than stock options that can only be sold after several years. Making a significant achievement can lead to a glamorous transformation. He can now give a good talking-to to the leaders of several key project teams.

"Mr. Chen, if you're sure you want to do this, I'll go back and hold a company meeting to talk to the employees! I'll give you feedback on their opinions tonight! If the majority agrees... then our management team will support you and can even advance the funds!"

Wu Ping's passionate speech was tinged with a hint of unease and a touch of awkwardness, but everyone could tell that he had figured out some of the benefits involved.

Kan Zhidong couldn't help but shake his head and laugh; he had taken a huge advantage and was still pretending.

The group owns 51% of Spreadtrum Communications, and the company will soon go public, which will dilute its shares, yet they are still paying for bonuses for the company.

Moreover, Spreadtrum is based in Shanghai, where houses are in high demand. With restrictions on second homes and supply and demand management policies, it's much harder to buy a house there than in Shenzhen.

A few days ago, I was talking to some real estate developers who were discussing how the 2010 World Expo would be held on the Huangpu River, and that the prices of houses along the river in Pudong and Puxi would skyrocket. They said that Shanghai's international image would be enhanced, and even the prices of houses within the inner ring would rise.

This arrangement benefits Spreadtrum employees the most.

However, the fact that the chairman didn't impulsively pay for the employees' down payments himself was already beyond his expectations. The people at Gu'an are remarkably composed; it's commonplace.

Lin Huixiang was a little anxious. She tugged at Xin Mengzhen's sleeve and whispered, "Please advise him. Your boyfriend is going to go bankrupt doing business like this. It's 10 billion yuan a year!"

Xin Mengzhen snapped out of her reverie.

This was the first time she had ever attended a meeting of Gu An, and the first time she had ever heard such a huge expenditure figure. She couldn't help but calculate the gains and losses of that "god-making award" and real estate, wondering if such a plan was too idealistic.

A plan to enable a thousand employees to buy houses in first-tier cities every year, which would amount to thousands over several years, is simply suffocating.

If it were her family's company, it would be quite good if they could enable a group of early employees to afford houses in Shanghai before retirement.

But when she saw Chen Xuebing's relaxed smile, her ears felt a little hot.

This is the taste of a dream.

Dreams should be breathtaking.

Lin Huixiang turned her head and saw Xin Mengzhen's affectionate gaze. Her ears turned red, and she thought to herself, "It's over. This girl is bewitched."

In fact, everyone in the room except her was possessed.

They initially joined Chen Xuebing's various crazy plans with a "let's see" attitude, and then watched him realize them step by step. Now, they have become accustomed to believing in him.

"Since General Manager Wu has no objections, let's proceed as planned. Ren Ying, draft a proposal and send it to General Manager Lu."

"Lin Huixiang, don't stay here. Go find General Manager Zhang and familiarize yourself with the environment. Hurry up and tidy up your workstation. Once you're done, Mengzhen and I will treat you to dinner to congratulate you on finding a new job."

After Chen Xuebing finished speaking, Kan Zhidong smiled and said, "Xiao Lin, it's the first time the chairman has waited for you to get off work. When you come to our Changzheng in the future, you must take good care of us and say a good word for us to the chairman."

That doesn't sound like a nice thing to say.

Rather, it is a kind of warning.

Lin Huixiang could tell what was going on, knowing that this was the big boss of Changzheng, her boss's boss's boss. Not wanting to leave a bad impression, she hurriedly got up and rushed to the door: "Hello, President Kan, I'll be right there!"

Chen Xuebing smiled and gestured to Xin Mengzhen, "Come upstairs and take a look at my office."

"Ah."

Xin Mengzhen stood up and took Chen Xuebing's hand.

When Ren Ying saw this, she quickly looked away.

She felt somewhat guilty towards Yang Qingyue, but she absolutely dared not reveal such a thing to Yang Qingyue.

As Chen Xuebing passed by her, he gave her a warning look.

After the two left, she stood there lost in thought.

Kan Zhidong knew everything and stood up, saying, "Assistant Ren, I heard you have a good relationship with that person in Shenzhen. You should help the boss maintain that relationship."

Ren Ying remained tight-lipped, but couldn't help asking, "Mr. Kan, are all men like this?"

Besides meeting Xin Mengzhen, she also met Cheng Danting.

Kan Zhidong shook his head: "Don't ask such questions, and don't be curious. The company will go public in the future. Protecting the chairman is protecting the company. This is our job. When we are working, we must put aside all our emotions."

Ren Ying's expression softened, and she regained her composure: "I know."

The matter of employee motivation seemed too calm in the office, but when it reached the lower levels, it was like a thunderclap.

That evening, Wu Ping called to say that the shareholders, management, and ten employee representatives had almost all voted in favor.

They also asked Chen Xuebing what the evaluation criteria for the Xihe Award were.

Chen Xuebing answered almost without hesitation: "International leadership."

This answer made Wu Ping feel a bit uneasy.

Spreadtrum has many projects, but most of them are just following in others' footsteps. Unless there is a breakthrough in 4G technology, what project can better demonstrate "international leadership" than Kirin and Kunlun?
The next morning, Lu Weibing also called.

"Chairman, why didn't you inform me of such a big matter beforehand? Last night I asked a friend, and the housing prices in Nanshan, Futian, and Luohu are all above 11,000 yuan per square meter. Even a 100-square-meter apartment costs over 1.1 million yuan! The down payment and mortgage payment alone would be 5500 yuan, and the monthly payment over 30 years would be 4600 yuan. That adds up to more than 10,000 yuan a month! Our employees aren't as wealthy as Spreadtrum. They have hundreds of veteran IC designers, many of whom are returnees from overseas. Here, many of our employees still have to send money home, and most of the new employees are living paycheck to paycheck!"

These days, people who live in Shanghai and people who live in Shenzhen are not even in the same social class.

"Just tell me if the employees support it or not," Chen Xuebing asked bluntly.

"Support? Of course we support it! I've asked around, and if the group were to support the housing prices, everyone would definitely want to buy! I'm just worried that young people from poor families might feel too much pressure and be unable to bear it but still try to tough it out."

"Then Qidian will try to make more money to provide them with benefits. In addition, I will consider their actual economic situation. For Qidian's first batch of houses, the price should be kept below 900,000 yuan, with a monthly payment of more than 8,000 yuan. Based on Qidian's expected revenue this year, the year-end bonuses of the Kunlun and Qilin project teams should exceed 80,000 yuan. If these people cannot afford to buy a house next year, it means that your initial ideological work was not done well."

“Okay! What about the incentive shares we plan to issue during the shareholding system reform? Will we still issue them? This time we have made a 4000 million share option plan, with 132 incentive recipients, 6.45% of the options, all of which will be issued from the 15% option pool.”

Lu Weibing knew that Chen Xuebing had an abnormal desire to control the equity and had realized that this plan was probably also done to save on equity. So he added, "We have already been very frugal this time. The company's management only issued shares to 11 people, totaling less than 1200 million shares. Lin Bin was given 200 million shares. His contribution was outstanding. I felt that 150 million shares was indeed too few, so I added 50 shares for him. I personally did not take any."

Lu Weibing has already received 2% incentive options, and he received them very early on. At that time, Qidian was valued at 100 million yuan, and the exercise price of 2% was only 2 million yuan.

Based on the current 620 million shares split by Qidian, valued at 10 yuan per share, Lu Weibing only needs to spend 2 million yuan to buy 1.24 million shares after three years of incentives, which is worth 124 million yuan.

He has only been with the company for a year and a half, but he has already earned more than Liu Chiping of Tencent. This time, he also showed good sportsmanship and did not participate in the incentive program.

Lin Bin's onboarding requirement was shares worth 15 million yuan, which at the current price is 1.5 million shares. Even if you add 500,000 more shares, it would only be 0.3%. However, this is a stock grant, not an incentive.

Chen Xuebing thought about it and realized that the current incentive would require him to spend 10 yuan per share to buy the shares after exercising the option in three years, so he couldn't get them in the short term.

"Here's what we'll do: this equity incentive plan will be cancelled except for the 1200 million shares allocated to management. Instead, we'll compensate them with cash at 5 yuan per share, as if the company's stock price has increased by 50%. We'll also include these 132 people in the housing plan and sell them 132 large houses. In addition, we'll tell the employees that this is to reserve the option pool for the IPO, and there will be opportunities for equity incentives once the IPO is completed."

The incentive is priced at 5 yuan per share, and acquiring 28 million shares would cost 140 million yuan, but it retains 4.5% of Qidian's equity.

Lu Weibing believes that no one will have any objections to this price, since options represent the future, while cash in hand is what truly matters.

"Okay! Then what about the Xihe Award? How is it judged? We don't have many scientific and technological research and development projects, nor do we have many high-end R&D talents. Competing with Spreadtrum is at a disadvantage! Chairman, you have to side with us, right?"

Lu Weibing also asked this question.

Chen Xuebing smiled and said, "The evaluation criteria are based on the breakthroughs made in the application of basic technologies."

"Huh? Isn't it...internationally leading?" Lu Weibing asked in surprise.

"Hehe, since you've already asked Wu Ping about it, why are you still asking me? Two companies, two sets of evaluation standards, fill in whatever's missing, let's see who runs faster."

(End of this chapter)