On February 19, Suzhou Dongshan Precision Manufacturing Co.Ltd(002384) issued the 2022 annual shareholding plan for core managers and technical talents. The plan does not require the holder’s contribution, and the employees do not need to pay other expenses except for the account opening fee, handling fee and relevant taxes. The source of shares is 1366100 shares previously repurchased by the company.
Recently, the employee stock ownership plans such as “fracture price” and “zero cost” launched by listed companies have attracted market attention. According to the reporter, as of February 20, three companies have launched “zero cost” employee stock ownership plans during the year.
The experts interviewed believed that the original intention of the employee stock ownership plan is to motivate employees, but if it is not set properly in the process of rule design and implementation, it may lead to incentive distortion, damage the interests of minority shareholders, and even be suspected of interest transmission. Supervision can improve relevant rules, guide the existing governance institutions of listed companies to play a role, and carry out long-term supervision.
three listed companies in the year
publish “zero cost” employee stock ownership plan
Equity incentive and employee stock ownership plan are common ways for listed companies to motivate employees. According to the statistics of choice data, since this year, as of February 20, 30 listed companies have issued employee stock ownership plans (according to the statistics of the first announcement date). From the progress point of view, 2 have been implemented, 15 have passed the general meeting of shareholders and 13 have passed the board of directors. In the same period last year, 34 listed companies issued employee stock ownership plans.
In the past, listed companies have implemented employee stock ownership plans, and there are many cases of employee “zero cost” stock ownership. According to incomplete statistics, in 2021, Perfect World Co.Ltd(002624) , Toly Bread Co.Ltd(603866) and other 13 listed companies’ employee stock ownership plans were “zero cost”. Since this year, in addition to Suzhou Dongshan Precision Manufacturing Co.Ltd(002384) , Anhui Korrun Co.Ltd(300577) , Fujian Forecam Optics Co.Ltd(688010) employee stock ownership plans have also been “zero cost”, and Anhui Korrun Co.Ltd(300577) , Fujian Forecam Optics Co.Ltd(688010) employee stock ownership plans have been inquired by Shanghai and Shenzhen stock exchanges.
“Whether the zero consideration is in line with the basic principle of ‘assuming sole responsibility for profits and losses, bearing risks and equal rights and interests with other investors’ in the guiding opinions on the pilot implementation of employee stock ownership plan by listed companies’, whether there is a situation of transferring interests to specific objects and whether it damages the interests of the company and shareholders.” Shenzhen Stock Exchange said in its inquiry on Anhui Korrun Co.Ltd(300577) .
“The original intention of the employee stock ownership plan is to motivate employees, but its purpose is complex.” Zheng Zhigang, a professor of finance at the school of Finance and finance of Renmin University of China, said in an interview with the Securities Daily that in addition to encouraging itself, it sometimes becomes a means for major shareholders to strengthen corporate control, senior executives to establish personal authority, and companies to maintain stable stock prices. The original intention of implementing incentive through employee stock ownership plan is good, but in the process of rule design and implementation, if it is not set properly, it may lead to incentive distortion, such as employees obtain incentive shares at “zero cost” or very low cost.
\u3000\u3000 “The implementation of employee stock ownership plan is to enable employees to bear symmetrical responsibilities for their rights and interests in some way in the future, which is also a basic principle of employee incentive plan in the world. However, if employees do not pay corresponding costs, that is, there is no corresponding acceptable income, it will increase their moral hazard tendency. Such employee stock ownership plans often produce The distortion of students’ incentive can not achieve the incentive effect in the end. ” Zheng Zhigang further explained.
“According to the regulatory provisions, the stock grant price of the equity incentive plan shall not be lower than the par value of the stock, and shall not be lower than 50% of the market price in principle. As for the stock pricing of the employee stock ownership plan, the guiding opinions on the pilot implementation of the employee stock ownership plan by listed companies do not have clear provisions.” Qi Menglin, senior partner of Huashang law firm, said in an interview with the Securities Daily that in the employee stock ownership plan, employees obtain shares at a lower price, which is conducive to maximizing the interests of employees; However, the stock pricing itself, which deviates seriously from the stock price of listed companies, is easy to question its commercial rationality, leaving room for benefit transmission.
“From the current situation, because the relevant rules do not stipulate the shareholding price of the employee stock ownership plan, but the impact of the plan on minority shareholders should be considered. If the company pays a high cost for the implementation of the employee stock ownership plan, it has a great impact on the company’s profits and may affect the interests of other minority shareholders, the supervision needs to pay attention.” Zhao Xijun, CO president of China Capital Market Research Institute of Renmin University of China, said in an interview with reporters.
“Zero to zero” cost of employee ownership plan {123567}
long term supervision
“In addition, the exercise rule is also an important index to evaluate the employee stock ownership plan. That is, the lock-in period of the employee stock ownership plan and the design of the lifting conditions are also very key.” Zheng Zhigang said.
In the employee stock ownership plan of Suzhou Dongshan Precision Manufacturing Co.Ltd(002384) , there are no performance assessment requirements at the company level. However, the company said that “it has set strict individual future performance evaluation requirements and income cashing cycle” and “the incentive object and grant scale match the established evaluation system of the company and the contribution of employees to the company”.
Fujian Forecam Optics Co.Ltd(688010) is to urgently modify the employee stock ownership plan after regulatory inquiry, adjust the transfer price to 10 yuan / share without the contribution of the transferee, and newly add the overall performance evaluation target at the company level.
For strengthening the supervision of “zero cost” or low-cost ESOP, Zheng Zhigang believes that regulators should guide the existing governance institutions of listed companies to play a role. ESOP involves the issue of equity change. From the perspective of procedure, the general meeting of shareholders should be held. If some system design is carried out at the general meeting of shareholders, small and medium-sized shareholders can make their own voice and put forward their own demands at the general meeting of shareholders, which will help to prevent or reduce the transfer of interests in the name of ESOP.
“Whether there is benefit transmission should focus on whether it damages the interests of small and medium-sized investors.” Zhao Xijun said that first of all, it depends on whether the ESOP itself complies with the relevant rules and whether the implementation process complies with the corresponding procedures. For example, in the board of directors and the general meeting of shareholders, the motivated relevant personnel need to avoid and cannot participate in the voting. If there is no avoidance mechanism, the plan may have defects or non-compliance; Secondly, it depends on whether the performance assessment requirements set by the company can encourage the core backbone to maintain stability, create value and bring more benefits to investors; Finally, the reduction design can not affect the sharp fluctuation of the secondary market price. Supervision should not only pay attention to the compliance of the plan, but also pay continuous attention to the follow-up implementation.
Qi Menglin believes that the supervision should strictly check the continuity of the employee stock ownership plan and the rationality of the salary structure, and compact the responsibilities of all parties from the perspective of preventing the transmission of interests. In addition, the transfer of interests is hidden and long-term, and the supervision needs to carry out long-term supervision on “zero cost” and other employee stock ownership plans.
