Equity incentives are experiencing a resurgence.
Amidst the ongoing transformation of the insurance industry and intensified competition for talent, Taikang Insurance and Sunshine Insurance have recently rolled out employee stock ownership plans (ESOPs), involving 4.69% and up to 10% of their total stock, respectively. Taikang aims to tie core talents to the long-term interests of the company, while Sunshine seeks to enhance its strategic progress post-listing through the “evergreen” plan, highlighting the differing incentive mechanisms of the two insurers.
Historically, employee stock ownership plans in China's insurance sector have evolved from early pilot schemes to regulatory halts and were eventually granted a compliance framework for ESOPs by the original Insurance Regulatory Commission in 2015. Since then, several insurers, including
It's worth noting that the implementation of industry employee stock ownership plans has not been smooth. Dobank Insurance faced regulatory investigations concerning its ESOP, while disputes arose over the inadequate exit mechanisms of Baijia Life and Zhonghua United.
Why have employee stock ownership plans, once fraught with issues, become “hot” again? According to analysis from financial sources, the current ESOPs differ from the past in that they have become a crucial tool for leading insurers to retain core talents; however, their success hinges on compliant design, transparent governance, and healthy operations.
01 A Decade Later: Enhanced Core Talent Incentives at Taikang and Sunshine
On September 30, Taikang Insurance Group announced the initiation of its “Core Employee Stock Ownership Plan,” involving 4.69% of the company’s total capital. Concurrently, Sunshine Insurance Group announced on September 29 the introduction of a new ESOP dubbed “Evergreen,” with related proposals to be reviewed at a temporary shareholders' meeting on October 22.
The purposes of the new ESOPs from both insurers are distinct yet complementary: Taikang aims to align the interests of shareholders, the company, and employees; create long-lasting incentives for core management and specialized personnel; and maintain the long-term incentive and constraint mechanism to mitigate mid-to-long-term corporate risks. Sunshine is adapting to the new realities post-listing, aiming to strengthen strategic advancement and achieve objectives while enhancing employees' sense of belonging and responsibility.
Moreover, both companies share a unique background. After years of stable operation and following a period of growth, both insurers are now facing challenges regarding sustainability. Their recent ESOPs reflect a broader trend in the insurance sector—amid a deep transformation and heightened competition for talent—aiming to bind core talents and optimize corporate governance through equity incentives.
An examination reveals that while the two ESOPs have similarities, they exhibit differentiated features in their specific design details and implementation methods, particularly regarding participation conditions, share sources, lock-up period arrangements, exit mechanisms, and plan scales.
These varied institutional designs illustrate the different paths chosen by the two insurers based on their development stages, equity structures, and talent strategies. Taikang, as a traditional insurance group, emphasizes precise incentives and long-term alignment for high-end talents; whereas Sunshine, as a relatively newer listed insurance company, leans towards broader incentives to expand its talent base.
Notably, this marks the first time in ten years that Taikang Insurance Group and Sunshine Insurance Group have implemented an ESOP.
Specifically, Taikang was the first insurer to initiate an employee stock ownership plan following the policy relaxation, having previously launched its plan in January 2016 with the repurchase completion announced in July 2022. Approximately 128 million shares were involved in the buyback, which subsequently became the source for the latest ESOP. Over the period from 2015 to 2022, Taikang’s ESOP generated substantial returns for over 3,000 employees, multiple times their principal investment, attributed to dividends and the appreciation of share value.
Sunshine had also launched an ESOP in 2015, with a subscription price of 4 yuan per share, involving the acquisition of 44.078 million shares, which represented 4.26% of the total capital post-implementation.
Currently, the employee stock ownership plans in the insurance sector are undergoing deep adjustments and differentiation, focusing on core talents while transitioning from “broad coverage” to “precise focus.” The design of these plans is becoming more refined, closely linked to strategic and performance metrics.
For insurance organizations, while implementing employee stock ownership plans can yield multifaceted benefits, they also present challenges. If internal factors are not clarified and improved through institutional means, it will undoubtedly lead to subsequent issues.
Historical examples illustrate that Baijia Life has faced legal disputes stemming from its ESOP, and Zhonghua United has encountered collective employee rights protection issues due to exit problems.
In August 2025, 53 former employees of Baijia Life collectively filed a lawsuit claiming the payment of equity incentives promised twelve years earlier, totaling 80 million yuan. Employees contended that Baijia promised that those leaving before five years would receive their principal plus bank interest; after five years, they would simply get their principal back along with higher bonuses. However, as Baijia's operational situation deteriorated, such promises remain unfulfilled.
Furthermore, the case of Zhonghua United highlights the importance of a sound exit mechanism within employee stock ownership plans; even though the company launched its ESOP as early as 2006, it faced significant challenges when large-scale stock transfers initiated by the company led to widespread employee discontent.
Comparing these examples reveals that ESOPs are not a one-size-fits-all solution; their successful implementation requires solid corporate governance, transparent operational mechanisms, reasonable expectation management, and a healthy operating foundation. For insurance companies, creating differentiated shareholding pathways and proactively planning exit mechanisms and risk responses across different economic cycles is crucial to prevent ESOPs from turning into sources of risk. 02 The Evolution of Insurance ESOPs: Standardization Resumption with Ping An, AIA, ZhongAn, Guoyuan, and Others Testing Waters
The exploration of employee stock ownership plans within China's insurance industry began in the 1990s and gradually developed alongside economic reforms and marketization efforts. This unique incentive mechanism transitioned from initial pilot trials to a complete halt, and now to regulated resumption, reflecting ongoing efforts by regulatory bodies and the insurance industry to establish long-term incentive constraints.
According to changes in regulatory policies, market conditions, and practical characteristics, the ESOPs in China's insurance sector can be roughly classified into the following four major stages:
Origin and Early Pilots (1990s - Early 2000s):
China Ping An was the "first mover" in employee stock ownership plans in the insurance sector. In the early 1990s, facing pressure on solvency and workforce retention, Ping An launched one of its first ESOPs as a pilot in Shenzhen. At that time, Ping An acted as a pilot unit for the implementation of employee stock ownership in the Shenzhen Special Economic Zone, using proxy holding through investment entities on behalf of the employees.
The last major implementation of employee stock ownership at Ping An occurred around 2000, involving approximately 19,000 employees holding a total of 859 million shares. Following its A-share listing in 2007, many of the 20,000 employees involved in the scheme received returns of millions overnight due to significant stock price increases.
This successful case set a benchmark for the industry and demonstrated the enormous potential of employee stock ownership plans in sharing corporate growth benefits. The primary drivers behind this phase included learning from international experiences, establishing incentive constraint mechanisms, and attracting and binding core employee interests, characterized by exploration and a lack of unified standards.
Limited Development and First Suspension (Around 2008):
Prior to 2008, several insurers, including Zhonghua United, Taikang Insurance, Hezhong Life, Xintai Life, and Dobank Insurance, attempted to implement employee stock ownership plans. Among these, Dobank initiated an ESOP in 2007, raising 720 million yuan through five employee shareholding companies. However, 310 million yuan of that was misappropriated by major shareholders, leading to corporate governance turmoil, including the ousting of the chairman and changes in executive leadership. The original Insurance Supervisory Commission ultimately intervened, declaring Dobank's ESOP “non-compliant with current regulations and to be quickly refunded.”
It's notable that the “lightning wealth” controversies from the 2008 financial sector’s ESOPs prompted regulators to become wary of the associated risks. In December 2008, the original Insurance Regulatory Commission required a halt to equity incentives and employee stock ownership plans.
Following this suspension, only a few insurers, such as China Ping An and Zhonghua United, continued ESOP implementations. Meanwhile, private companies like Taikang Insurance and Hezhong Life exited their ESOPs through stock buybacks, sometimes at a significant premium, benefiting employees in the process.
Before 2008, common characteristics of the insurance industry’s employee stock ownership plans included exploratory and diverse elements devoid of unified standards, poorly designed exit mechanisms that could lead to disputes, and some plans containing “capital protection and interest guarantees” akin to bond commitments.
Regulatory Vacuum and Implicit Practices (2009-2014):
During the regulatory halt, some companies continued to experiment with ESOPs in various forms. For instance, in 2009, Baijia Life introduced its “Senior Management Long-Term Equity Incentive Plan,” aimed ultimately at an IPO. However, this plan did not receive regulatory approval, and the shares were held by Dalian Guotai Real Estate Development Co., Ltd.
It's worth noting that many founding employees of Baijia Life came from Ping An. Having experienced the benefits of stock ownership, they joined Baijia Life in the hope of seizing new opportunities; however, the outcomes were less than satisfactory.
This period was characterized by a closed formal approval channel, with some companies employing covert or adaptable practices and unclear exit mechanisms, setting the stage for potential disputes in the future.
Resumption of Regulation and Development (2015-Present):
The year 2015 marked a turning point in the development of ESOPs within the insurance sector. In July 2015, the original China Insurance Regulatory Commission issued a notice about ESOPs within insurance agencies, signaling a regulated resumption of employee stock ownership plans. This announcement thoroughly defined key elements like the participant qualifications, shareholding ratio, holding period, and source of equity.
Participants need to meet several criteria: the insurer must have operated for more than three years with profit in the last year; employees must have been officially employed for at least two years. For general insurance employees, the maximum shareholding cannot exceed 10%, and no single employee can hold more than 1%. For innovators such as internet insurance companies, these limits are expanded to 25% and 5%. The holding periods must be no shorter than three years, with a lock-up period of at least three years following listing. The sources of equity must be via legitimate means like shareholder transfer, gifting, issuance, or buyback.
Post-2015, alongside the aforementioned Taikang Insurance and Sunshine Insurance, several insurers, including
For instance, China Ping An launched core personnel ESOPs and long-term service plans in 2015 and 2018 respectively; the former targets key core personnel of the company and its subsidiaries, while the latter covers core talents.
Data shows that by 2025, Ping An's core personnel ESOP involved 2,263 people, with transaction values reaching 605 million yuan for A-shares purchased in the secondary market, while the long-term service plan covered 83,000 employees, with a total purchase value of 3.875 billion yuan, nearly 37 times more participants than the core personnel plan.
Since AIA's listing in Hong Kong in 2010, it has gradually rolled out employee stock ownership plans, introducing its first employee purchase plan in 2011 and becoming the first foreign insurer authorized to promote overseas listing equity plans in China in 2012, covering 50.45% of its employees and significantly reducing attrition rates. By September 2025, AIA had granted 126,600 stock options to its employees, with flexible exercise methods. Earlier in April 2025, AIA also initiated a $1.6 billion share repurchase to optimize its capital structure and reward shareholders. AIA’s alignment of employee interests with the company’s long-term development has enhanced the stability of its core team.
ZhongAn Insurance, China’s first internet-based insurer, implemented its ESOP in 2016, covering 98 individuals, including management, core employees, and those approved by the board; shareholders provided 60 million shares, constituting about 4.836% of the company's total equity.
Feedback from the implementation indicates that ZhongAn’s ESOP achieved its expected outcomes. For instance, the net profit of the company doubled to 9.37 million yuan within a year of the plan’s rollout. Subsequently, ZhongAn became listed on the main board of the Hong Kong Stock Exchange in September 2017, marking its position as the first stock from the insurtech sector, leading to a significant increase in employee stock values.
According to ZhongAn's 2024 annual report, as of December 31, 2024, the company’s employee stock ownership plan experienced a change in the total number of shares held to 45.6737 million shares due to sell-downs, representing 3.102% of ZhongAn’s total equity. Currently, three executives and employees from management and core levels are included among the shareholders.
Guoyuan Insurance also disclosed an ESOP plan in 2019 with a scale of 210 million shares, accounting for 9.98% of the total capital, sourced from shares raised through partnerships established for participating members, with a subscription price of 1.58 yuan per share. The plan included terms linked to listing, specifying six years of holding if not listed, while if listed, the lock-in period extends three years past the IPO. By the end of 2021, Guoyuan Insurance’s A-share IPO application was accepted by the regulatory commission.
Overall, Guoyuan's ESOP has effectively incentivized its core team, driven preparations for the IPO, and maintained compliance, although the long-term impact remains contingent on the company’s listing progress and the practical execution of its exit mechanisms.
During the period of regulated resumption, the regulatory body aims to enhance corporate governance, establish effective long-term incentive mechanisms, and promote the steady development of the industry. This phase is primarily characterized by having established guidelines to follow, tight linkage with listing expectations, and becoming a hallmark of high-quality insurers.
New era, new demands, new opportunities, and new challenges. Upon reviewing the recent evolution of employee stock ownership plans, the transformation of ESOPs within the insurance industry clearly mirrors the development trajectory of the sector, driven by regulatory guidance, market cycles, and corporate governance needs. As more insurers join this wave, the efficacy of employee stock ownership plans in evolving from "golden handcuffs" to "golden keys" will be validated over time.