In addition to building and housing distribution for employees, recently Gree Electric Appliances Inc.Of Zhuhai(000651) has increased equity incentive!
Less than a year later, Gree Electric Appliances Inc.Of Zhuhai(000651) announced on May 20 that it would launch the second phase of employee stock ownership plan, and frankly said that compared with the incentive policies of other enterprises in the industry and the growing demand for talents under the background of industrial diversification, the lack of long-term incentive is still a weakness in corporate governance.
middle and grass-roots employees have priority to subscribe
On the evening of May 20, Gree Electric Appliances Inc.Of Zhuhai(000651) announced that in order to share the development achievements of the enterprise with employees, improve employees’ enthusiasm and creativity, and ensure the realization of development strategies and business objectives, the company plans to implement the second phase of employee stock ownership plan to further improve the benefit sharing and risk sharing mechanism between shareholders and management, middle-level cadres and core employees.
According to the announcement, the stock source of the employee stock ownership plan is the shares repurchased in the third phase of the repurchase plan in the company’s special repurchase account. The stock scale does not exceed 94.728 million shares, accounting for 1.60% of the company’s current total share capital, and the overall capital scale does not exceed 1.55 billion yuan. The total number of employees who intend to participate in the employee stock ownership plan shall not exceed 12000.
It is worth noting that the grass-roots employees in this shareholding plan have the preemptive right. The plan shows that the holders include directors (excluding independent directors), supervisors and senior managers of the company, as well as middle-level cadres and core employees of the company and its holding subsidiaries who are recognized by the board of directors as important to the overall performance and medium and long-term development of the company.
Among them, the priority subscription proportion of middle and grass-roots cadres, core employees and technical experts reached 97.47%. Eight directors and supervisors, including Gree Electric Appliances Inc.Of Zhuhai(000651) director Zhang Wei, vice president Zhuang Pei, and Secretary Deng Xiaobo, each proposed to subscribe for 300000 shares, with a capital contribution ceiling of 4.908 million yuan, accounting for 0.32% of the plan and a total proportion of 2.53%. In addition, the announcement also pointed out that if there is surplus, chairman Dong Mingzhu will subscribe according to law in combination with his own situation.
On the other hand, the subscription price is also lower than that in the first phase. The purchase price of the company’s repurchased shares in the employee stock ownership plan is 16.36 yuan / share, while the subscription price in the first phase of the employee stock ownership plan is 27.68 yuan / share. However, from the perspective of stock price changes, since the first phase of the employee stock ownership plan was announced last year, the Gree Electric Appliances Inc.Of Zhuhai(000651) stock price has shown a volatile downward trend. As of the closing on May 20, it was reported at 33.23 yuan per share, with a decline of 36.6% in the past year.
In addition, the lock period of the first phase of the employee stock ownership plan is until the employee retires, while the lock period of the current employee stock ownership plan is shortened to 12 months.
adjust the evaluation standard of phase I plan
Compared with Gree’s two employee stock ownership plans, the assessment objectives of the second plan have been adjusted. Specifically, the net profit in 2022 and 2023 will increase by no less than 2 billion yuan and 3 billion yuan respectively compared with that in 2020, and the return on net assets in 2022 and 2023 will not be less than 22% and 21% respectively, and the cash dividend per share will not be less than 2 yuan or the total cash dividend will not be less than 50% of the net profit of the current year.
In addition, Gree Electric Appliances Inc.Of Zhuhai(000651) also announced that the assessment objectives of the first phase of the employee stock ownership plan have been adjusted, and the net profit growth in 2021 and 2022 compared with 2020 will be no less than 10% and 20% respectively to no less than 1 billion yuan and 2 billion yuan. The assessment index of 2022 with the return on new net assets of no less than 22% is the same as that of phase II employee stock ownership plan.
For the reasons for the adjustment, Gree Electric Appliances Inc.Of Zhuhai(000651) said that since the company launched the first phase of the employee stock ownership plan in 2021, the external environment has changed greatly and the production and operation are facing more uncertainty, but the management of the company will continue to take the original performance target of the first phase of the employee stock ownership plan as the annual operation guide and strive to achieve it. In order to make up for the company’s lack of incentives for a long time, fully mobilize the enthusiasm of employees to cope with the severe impact of the external situation and realize the steady growth of the company’s future performance, the company plans to adjust the performance net profit assessment index of the first phase of the employee stock ownership plan, increase the assessment index of return on net assets, maintain the return on net assets at a high level in the industry, and establish shareholders and management through the implementation of the employee stock ownership plan Benefit sharing and risk sharing mechanism between middle-level cadres and core employees to improve the sense of ownership and enthusiasm of core employees.
In terms of performance appraisal indicators at the individual level, the two periods are implemented according to the company’s internal personal performance appraisal methods. The holder can only obtain the corresponding ownership of rights and interests on the premise that the company’s performance appraisal indicators meet the standards in each appraisal ownership period, the individual performance appraisal grade is grade C or above, and there is no violation of the relevant provisions and commitments of the draft and the measures for the administration of employee stock ownership plans.
From the performance data, in 2021 Gree Electric Appliances Inc.Of Zhuhai(000651) achieved a net profit of 23.064 billion yuan, an increase of 4.01% year-on-year, and the return on net assets was 21.34%. In 2020, the Gree Electric Appliances Inc.Of Zhuhai(000651) net profit was 22.175 billion yuan. According to the latest adjusted assessment objectives, Gree Electric Appliances Inc.Of Zhuhai(000651) needs to achieve a net profit of about 24.286 billion yuan in 2022 before the attributable distribution of the two phases of attributable stock rights and interests can be carried out.
According to the first quarter report data of Gree Electric Appliances Inc.Of Zhuhai(000651) , in the first quarter of 2022, the company achieved a revenue of 35.26 billion yuan, a year-on-year increase of 6.24%, and a net profit of 4.003 billion yuan, a year-on-year increase of 16.28%.
lack of long-term incentives is still the weakness of corporate governance
For the reason why the ESOP was pushed again after less than a year, Gree said frankly in the announcement that the lack of long-term incentive is a weakness in corporate governance.
It is reported that Gree Electric Appliances Inc.Of Zhuhai(000651) since 2012, the net profit has increased from more than 7 billion yuan to more than 22 billion yuan for many consecutive years, up to 26.4 billion yuan. At the same time, since the listing, the cumulative cash dividend has exceeded 100 billion yuan, and the total cash dividend per share implemented in the past three years has reached 9.70 yuan. At present, the company has implemented the three-phase share repurchase plan, and the total amount of funds used for repurchase has reached 27 billion yuan.
However, in terms of equity incentive, Gree Electric Appliances Inc.Of Zhuhai(000651) said that the company had not implemented any equity linked incentive measures for 13 years and did not launch the first phase of employee stock ownership plan until 2021, covering only more than 4000 people. Compared with the incentive policies of other enterprises in the industry and the growing talent demand under the background of industrial diversification, it was still insufficient. The lack of long-term incentive is still a weakness in corporate governance, which is not conducive to further mobilize the initiative and creativity of employees and realize the sustainable development of the company.
Since the third quarter of 2020, the price of bulk raw materials has continued to rise sharply. The tense geopolitical situation at the beginning of 2022 continued to promote the high fluctuation of bulk commodity prices. Covid-19 epidemic broke out repeatedly. The real economy is facing the triple pressure of shrinking demand, supply shock and weakening expectation. The risks, challenges and pressures faced by the company’s production and operation have doubled.
Gree Electric Appliances Inc.Of Zhuhai(000651) said that the long-term, stable and healthy development of the company is inseparable from the hard work of employees. In order to share the achievements of enterprise development with employees, improve employees’ enthusiasm and creativity, and ensure the realization of development strategy and business objectives, the company plans to implement the second phase of employee stock ownership plan. Further improve the benefit sharing and risk sharing mechanism between shareholders and management, middle-level cadres and core employees.
In addition, for Gree Electric Appliances Inc.Of Zhuhai(000651) the re launch of the employee stock ownership plan, it is also regarded as the call of the corresponding regulatory authorities.
According to the notice on further supporting the healthy development of listed companies jointly issued by CSRC, SASAC and all China Federation of industry and Commerce in April this year. Encourage listed companies to repurchase shares for equity incentive and employee stock ownership plans. Support eligible listed companies to repurchase in order to stabilize the share price. Support listed companies to raise funds and implement share repurchase through issuing preferred shares, bonds and other channels according to law.
