Is the “cabbage price” behind the employee stock ownership plan of listed companies abnormal?
After Sto Express Co.Ltd(002468) (002468. SZ) threw out the employee stock ownership plan of “fracture price” of 1 yuan / share, Fujian Forecam Optics Co.Ltd(688010) (688010. SH) was more “generous” and directly gave the repurchased shares to employees free and unconditionally. There are many controversial points and doubts in the market, such as whether the above behavior involves interest transmission.
Wu Siying, partner of Xingong consulting, told the first financial reporter that this phenomenon is not uncommon. At present, nearly one-third of the cases where the repurchase shareholding plan is two or three times lower than the market price. The design of listed companies may be based on the historical contribution of employees, bind talents, optimize salary structure, link market value, promote performance and other factors, Of course, it is not ruled out that some companies do implement ESOP with certain interest preference. In this case, investors will pay more attention to whether the company can bear the diluted cost, how long to bind employees, how to assess, whether it can have better performance in the future, etc.
unconditional free share donation cited doubts
On January 15, Fujian Forecam Optics Co.Ltd(688010) released an employee stock ownership plan with zero price and no performance appraisal target, which immediately attracted market attention.
According to the Fujian Forecam Optics Co.Ltd(688010) zhuoguanzhe No. 1 shareholding plan (Draft), the shares of the shareholding plan are obtained and held by the shares repurchased by the company at zero price, and there is no need for the participants to contribute. The stock size does not exceed 120000 shares, accounting for 0.08% of the current total share capital of the company.
It is worth noting that this part of the shares freely given to employees are repurchased by Fujian Forecam Optics Co.Ltd(688010) at the average price of 26.01 yuan / share. Based on this calculation, the total price is about 3.12 million yuan. In addition, Fujian Forecam Optics Co.Ltd(688010) it is estimated that the total share based payment fee is 3.1848 million yuan, which will be amortized over three years.
The participants of this ESOP are directors, supervisors and key personnel without independent directors, with a total number of no more than 81, including 10 directors, supervisors and senior personnel without independent directors.
Not only free, but also no assessment conditions. The explanation given by Fujian Forecam Optics Co.Ltd(688010) is that the personnel participating in the shareholding plan are the core management team and backbone personnel of the company, which has an important impact on the business development and strategic realization of the company. This move is intended to prevent brain drain, enhance the stability of the talent team, and mobilize the enthusiasm and creativity of workers.
In this regard, some market participants questioned whether such unconditional zero percent gift of employee stocks can really play an incentive effect? Fujian Forecam Optics Co.Ltd(688010) weak profitability doesn’t need assessment objectives to mobilize the enthusiasm of employees?
From the performance of Fujian Forecam Optics Co.Ltd(688010) , the company’s revenue from 2018 to 2020 almost stagnated, with a year-on-year increase or decrease of about 5%; The net profit attributable to the parent company was flat in the first two years, with a year-on-year decrease of 44.64% in 2020, and still in a downward state in the first three quarters of 2021, with a decrease of 8.69%.
“fracture price” was questioned at the same time, and the exercise conditions were low
The {8010} employee stock ownership plan was also questioned by many {8010} employees in the market.
On January 14, Sto Express Co.Ltd(002468) threw out an employee stock ownership plan. The participants were directors, senior managers, core managers and key employees who were recognized by the board of directors as having an important role and impact on the overall performance and medium and long-term development of the company. The total number was no more than 124 (excluding reserved shares), and the purchase price of repurchased shares was 1 yuan / share.
According to the announcement, the total number of shares of the employee stock ownership plan does not exceed 19559900, accounting for 1.28% of the company’s current total share capital, of which 14356400 shares are used for employees participating in the employee stock ownership plan for the first time, and the remaining 52035000 shares are transferred as reserved shares within the time specified in the employee stock ownership plan.
At that time, Sto Express Co.Ltd(002468) repurchased the above shares, the highest transaction price was 15.50 yuan / share, the lowest transaction price was 9.16 yuan / share, and the total transaction amount was 236 million yuan (excluding transaction costs). Sto Express Co.Ltd(002468) according to the preliminary prediction, the total share based payment expenses to be recognized are RMB 115 million, which will be amortized from 2022 to 2025.
According to the latest share price of 8.34 yuan / share on February 16, Wang Wenbin, director and general manager of Sto Express Co.Ltd(002468) the largest subscriber of the employee stock ownership plan (to subscribe for 2.9812 million shares), directly received incentive funds of more than 20 million yuan.
In addition to the market attention caused by the cabbage price of 1 yuan / share, Sto Express Co.Ltd(002468) the exercise conditions of the employee stock ownership plan are also accused of being too low. Therefore, most investors questioned that the employee stock ownership plan was suspected of delivering benefits to the management.
According to the announcement, Sto Express Co.Ltd(002468) the employee stock ownership plan has two assessment periods: the first is that the growth rate of express business in 2022 is not lower than the growth rate of express industry in the current year or the net profit returned to the parent company after deducting non profits in 2022; The second is that the growth rate of express business volume in 2023 is not lower than that of the express industry in the current year, or the net profit attributable to the parent company after deducting non profits in 2023 is not less than 500 million yuan.
According to the performance forecast of 2021, Sto Express Co.Ltd(002468) is expected to lose 840 million yuan to 950 million yuan, while the profit in the same period of last year is 36.3273 million yuan.
Sto Express Co.Ltd(002468) explain the reasons for the performance changes, saying that due to the changes in the express market in 2021, the company’s asset investment and the provision of asset impairment, the annual performance is still under pressure. If the impact of the above asset impairment is excluded, the company’s performance in the fourth quarter of 2021 is expected to be profitable.
look at these key points of ESOP
Then, why do listed companies grant the “cabbage price” of repurchased shares to employees? What key points should investors pay attention to in the employee stock ownership plan?
Wu Siying told the first financial reporter that in fact, it is not uncommon for ESOP to be granted to employees at a low price in the market. At present, it is estimated that nearly one third of the cases are two or three times lower than the market price. There are two reasons for this phenomenon:
First, in terms of policy, the ESOP is different from the equity incentive plan. The equity incentive plan has a clear pricing basis in the applicable management measures. In principle, it is not less than 50% of the market price. If it is lower than the market price, financial opinions need to be issued, and the assessment requirements will be relatively higher; The rules of the employee stock ownership plan have not been updated since 2014, with relatively few constraints and no clear pricing. Moreover, the mode of stock source repurchase also gives more listed companies greater autonomy and flexibility, and even zero consideration to employees. However, the higher the relative benefit, the higher the cost the company needs to accrue, This depends on whether the company can bear the cost in exchange for higher performance contribution in the future. If the two can be balanced within the company, the low consideration is reasonable.
Second, we need to see how long the stock ownership plan will be cashed out to employees, such as two or three years or more. In fact, the core issue is whether employees can make more contributions to the company, including whether employees are willing to continue to serve the company. Some enterprises grant employee stocks at a low price. One major factor is to bind more holding time and retain talents.
In the case of Fujian Forecam Optics Co.Ltd(688010) , the controversial point this time is the free and unconditional gift of shares to employees. Based on the historical contribution of the company’s employee stock ownership plan, Si Ying believes that this matter can be viewed dialectically. On the one hand, some enterprises did not do too much equity incentive before listing, and the first thing after listing is to divide a wave of equity based on historical contributions; On the other hand, in Fujian Forecam Optics Co.Ltd(688010) , there are not many shares granted to senior executives, up to 3800 shares. At the same time, the company also launched the first and second types of restricted stock equity incentive plans.
In Wu Siying’s view, Fujian Forecam Optics Co.Ltd(688010) the employee stock ownership plan also binds the interests of employees to the market value of the company to a certain extent. It is not necessarily linked to long-term interests only by setting up performance appraisal, and the shares given are also strongly linked to the market value or value of the company.
“Of course, it does not rule out that some companies implement employee stock ownership plans with certain interests. In this case, investors will pay more attention to whether the company can bear the diluted cost, how long to bind employees, how to assess, whether it can have better performance in the future, etc.” Wu Siying said.
