“Since the implementation of the three-year action of state-owned enterprise reform, China Ordnance Industry Group Co., Ltd. (hereinafter referred to as ordnance industry group) has successively promoted three A-share and one H-share listed companies to implement equity incentive, with a total of 58.306 million incentive shares and 447 incentive objects.” Recently, yuan Shubao, Minister of reform and Asset Management Department of ordnance industry group, revealed in an interview with the reporter of Securities Daily that at present, other holding listed companies affiliated to ordnance industry group have formulated three-year equity incentive plans, of which some listed equity incentive plans are in the process of review.
As an important measure to stimulate the vitality of enterprise employees, in recent years, SASAC has repeatedly “shouted” that central enterprises should promote positive incentives, medium and long-term incentives and equity incentives. Data show that by the end of the first quarter of this year, the number of equity incentives implemented by listed companies controlled by central enterprises had increased by about 88.9% year-on-year, and the number of equity incentives had increased significantly.
Experts interviewed by the Securities Daily said that the equity incentive policy is of great strategic significance for the improvement of the core competitiveness of central enterprises. It is expected that more listed companies controlled by central enterprises will implement equity incentive in the future.
Improvement of catalytic capacity
According to the statistics of the reporter of Securities Daily, as of March 31 this year, 17 listed companies controlled by central enterprises have implemented equity incentives, involving 16261 people; Seven listed companies controlled by central enterprises issued new equity incentive plans, involving 11074 people.
Song Xiangqing, vice president of the Government Management Research Institute of Beijing Normal University and director of the industrial economy research center, said in an interview with the Securities Daily that the implementation of equity incentive has a positive catalytic effect on the performance growth of listed companies controlled by central enterprises, especially the improvement of innovation ability, and is the engine to improve the vitality and efficiency of central enterprises.
Taking North Navigation Control Technology Co.Ltd(600435) as an example, the company’s operating performance and net profit have increased significantly since the implementation of equity incentive in 2020. The annual report shows that in 2021, North Navigation Control Technology Co.Ltd(600435) operating revenue increased by 32.81% year-on-year; The net profit attributable to shareholders of listed companies increased by 113.67% year-on-year.
“Through the implementation of equity incentive, the company has effectively attracted and stabilized high-quality talents.” Yuan Shubao told reporters that with the successful implementation of equity incentive in four listed companies including North Navigation Control Technology Co.Ltd(600435) etc., the enthusiasm of other listed companies in the ordnance industry group system to promote equity incentive was also stimulated. “We have reached a consensus internally, deeply bound talents and enhanced endogenous power; we have made clear the good expectations of the company’s development externally, which is conducive to promoting the market value management of listed companies.”
It is not just the ordnance industry group. Earlier, the relevant person in charge of China Ocean Shipping Group also disclosed to the reporter of Securities Daily that up to now, China Ocean Shipping Group has achieved full equity incentive coverage of its 10 listed companies, granted 480 million shares in total, covering more than 1400 core backbone people. The data show that by the end of 2021, the total market value of listed companies controlled by COSCO Shipping Group had increased by 179% compared with the end of 2019, and the quality and development momentum of listed companies had been significantly enhanced.
Song Xiangqing said that equity incentive is a more flexible and market competitive salary distribution mechanism on the premise that central enterprises make good use of the separate payroll policy, which is conducive to promoting the risk sharing and benefit sharing of different groups such as senior executives, scientific researchers and technical backbones. It is equivalent to creating a pair of “golden handcuffs” of equity incentive for the core and key talents of central enterprises, which organically binds talents with the interests of enterprises.
This year is the closing year of the three-year action of state-owned enterprise reform. Previously, in clarifying the six key tasks to be highlighted this year, SASAC also specifically mentioned that “we should make good use of and make full use of the three-year action plan of state-owned enterprise reform, and the equity incentive of China’s holding listed companies”.
Song Xiangqing said that under the guidance of policy and regulatory authorities, it is expected to see more listed companies controlled by central enterprises implement equity incentives in the future. In the process of promoting equity incentive, listed companies controlled by central enterprises should also pay attention to the positive guidance and strengthening of equity incentive effect on the atmosphere of innovation and struggle, that is, the implementation of incentive policies should be “dead”, and anyone under the same policy should be treated equally; The connotation of incentive mechanism is to “live”, and adjust the strategy in time according to the changes of environment and market, so as to benefit more people, make greater contributions and receive more benefits. In addition, we should also pay attention to balancing the psychological gap between those who are equity incentive and those who cannot enjoy equity incentive, and guide and improve the full incentive model suitable for different positions.
there is still room to strengthen incentives
In fact, although the number of listed companies controlled by central enterprises that promote equity incentive has increased significantly in recent years, this accounts for only a small proportion of the large number of subsidiaries of central enterprises. For many unlisted subsidiaries of central enterprises, strengthening positive incentives will undoubtedly rest on medium and long-term incentive policies such as excess profit sharing.
In the year of tackling tough problems and ending the three-year action of state-owned enterprise reform, “further promoting the comprehensive deepening and implementation of various measures of market-oriented mechanism” has also become the focus of the work of SASAC and central enterprises.
Weng Jieming, deputy director of the office of the state owned enterprise reform leading group of the State Council and member and deputy director of the Party committee of the state owned assets supervision and Administration Commission of the State Council, particularly stressed at the “three-year action special promotion meeting on state owned enterprise reform” held in mid January this year, “We should make good use of the three-year action plan for the reform of state-owned enterprises. China has medium and long-term incentive policies such as equity incentives for holding listed companies, equity and dividend incentives for state-owned science and technology enterprises and excess profit sharing, so as to expand the coverage and application depth of the policies”.
The reporter of Securities Daily learned from the SASAC that according to preliminary statistics, 4390 subsidiaries of central enterprises and 2172 subsidiaries of local state-owned enterprises have carried out medium and long-term incentives respectively, accounting for 86.2% and 44.1% of subsidiaries at all levels with medium and long-term incentives, and the number of incentives is 294400 and 193100 respectively.
Zhang Baoling, member of the CPC Committee and deputy general manager of MCC Jingcheng, introduced to the reporter of Securities Daily that since the three-year action of state-owned enterprise reform, MCC Jingcheng has further improved the R & D achievement evaluation system, formed a R & D incentive system, and implemented it according to different types of projects. The incentive policy has also greatly stimulated the enthusiasm of employees for R & D. in 2021, MCC Jingcheng invested 630 million yuan in R & D, an increase of 20% year-on-year.
“An important way to do a good job and invigorate state-owned enterprises is to improve the market-oriented management mechanism and strengthen incentive means.” Wu Gangliang, a researcher of China enterprise reform and Development Research Association, told reporters that in terms of incentives, short-term incentives such as wages and bonuses alone are far from enough. Medium and long-term incentives are also needed to realize the “deep binding” between the development of the company and the interests of employees. At the end of the three-year action of state-owned enterprise reform, enterprises should expand the scope of application on the basis of summing up experience, so that qualified enterprises can further make good use of and activate the incentive policies, so as to make greater achievements in operation.
