People's Daily Online: Sany Heavy Industry's 178 million shares motivate employees to be confident and inject a boost into the development of the industry

Source: People's Daily Online-Finance Channel
 

"Winter is coming, will spring be far away?"

On November 7, an equity incentive plan launched by Sany Heavy Industry was like "a fire in winter", sending a touch of warmth to the harsh winter of the industry. The plan proposes to give 178 million shares to 2,533 employees, including more than 10 senior executives.

As soon as the news came out, some media commented that the incentive was so strong and the coverage was wide. As a leading enterprise in the industry, Sany's move will surely transform "employee success" into the driving force of enterprise development, and effectively boost the confidence of the industry, and take the lead in driving the recovery of the industry to break through.

The plan has been in the making for a long time and has been evaluated by authoritative institutions　The incentive rules are legal and compliant

According to the announcement of Sany Heavy Industry, the incentive plan intends to grant a total of 178,255,100 rights and interests to the incentive objects, including directors, senior managers, middle managers and core business (technical) personnel, a total of 2,533 people.

The announcement disclosed that the incentive plan includes two parts: a stock option incentive plan and a restricted stock incentive plan. In terms of the exercise of stock options, the plan stipulates that the exercise price is 9.38 yuan, and the grant price of restricted shares is 4.69 yuan. Options account for nearly 90%, restricted stocks account for only 10%, and the exercise condition is that the annual net profit in 2013, 2014 and 2015 will increase by no less than 10% over the previous year (the net profit during the waiting period shall not be less than the previous three years).

In order to better familiarize the majority of shareholders with the background of the incentive plan, the reporter interviewed the relevant person in charge of Sany Heavy Industry.

"We have been carefully preparing for this equity incentive plan for three months. In order to take into account the interests of shareholders, the company and employees, we invited the first-class legal and consulting institutions in China to jointly draft the plan, and they also issued professional opinions. As a company that pays attention to integrity, Sany has issued such a major incentive plan, which is fully in line with laws and regulations. Xiao Youliang, deputy general manager, chief financial officer and secretary of the board of directors of Sany Heavy Industry, told reporters.

The reporter found that in terms of shareholders' attention to the exercise conditions, compared with other listed companies, the provisions on the exercise conditions in the Sany Heavy Industry incentive plan are also reasonable. According to the announcement, in the stock option plan launched by CIMC in 2009, the exercise threshold is "net profit after deducting non-recurring gains and losses shall not be less than 6% compared with the previous year". Qingdao Haier, Supor, Tasly, Tongfang and many other well-known enterprises have the exercise threshold of equity incentives at about 10%.

Shanghai Rongzheng Investment Consulting Co., Ltd. is a well-known professional consulting company for equity incentives in China, with rich practical experience in equity incentive operations, as the designer of the equity incentive plan, in terms of legal compliance, the company issued an "independent financial adviser report". At the same time, He Zhicong, a partner of Rongzheng Consulting, mentioned that in addition to legal compliance, Sany Heavy Industry's equity incentive plan needs to comprehensively consider the four major elements of industry characteristics, development stage, strategic objectives and corporate culture, and its plan has a strong personality and is not a "replicable" plan in the general sense.

The reporter then interviewed Hunan Qiyuan Law Firm and other relevant institutions. At Qiyuan Law Firm, the person in charge pointed out that the "Stock Option and Restricted Stock Incentive Plan (Draft)" formulated by Sany Heavy Industry complies with the provisions of relevant laws, regulations and normative documents such as the Company Law, the Securities Law, the Measures for the Administration of Equity Incentives, Memorandum No. 1, Memorandum No. 2 and Memorandum No. 3.

The industry is at a juncture of confusion　Trinity's large-scale incentive is really a move of confidence

At present, for the development of China's construction machinery industry, and even the future trend of China's economy, the two schools of thought are arguing fiercely. At the harsh winter moment of the industry, Sany Heavy Industry's large-scale equity incentive, Sany management team showed its confidence in the development of the industry with actions.

In this regard, Dong Yaguang, a researcher at Guojin Securities, said that the company's choice to carry out equity incentives at a time when the current industry demand is sluggish and performance is poor, on the one hand, it shows that the company is still confident in future growth, and on the other hand, it can also improve the enthusiasm of core employees.

It is worth noting that in the incentive plan announced by Sany Heavy Industry, it is stipulated that the incentive object must complete the assessment requirements of the performance contract signed with the company and be qualified. Incentive recipients of functional headquarters, business divisions and subsidiaries that fail to meet the standards shall not exercise their rights.

In fact, the performance contract formulated by Sany is much higher than the 10% lower growth rate stipulated in the incentive plan.

On the second day of Sany Heavy Industry's incentive plan, the "18th National Congress of the Communist Party of China" opened, and the party's new leadership collective will undoubtedly open the prelude to a new round of reform and development in China.

It is expected that in 2013, the central policy will be tilted towards large-scale water conservancy projects, affordable housing investment, road maintenance, new energy construction, and urban rail construction. Liu Rong from China Merchants Securities said that due to the new start to the recovery of construction machinery there is a certain time lag, is expected in 2013, construction machinery market demand will pick up.

Li Xiaoguang of Shenyin Wanguo said: "The background of infrastructure strengthening still exists, and the expectation of new real estate starts will gradually improve under the condition of maintaining sales and increasing the destocking rate." Although the current construction machinery can not rebound as sharply after June 2009, we believe that in the case of infrastructure enhancement and the gradual improvement of new real estate starts, construction machinery stocks will rise. ”

However, at the recent annual meeting of the British Construction Equipment Association (CEA), Colin Timms of British consulting firm Off-Highways Research, commented on China's future needs: "The growth we see will not be sustainable", and the Chinese government's increased investment will once again trigger an overheated market, with undesirable consequences.

Some media commented that as the vane of China's construction machinery industry, at the critical moment of disagreement in the development of the industry, Sany Heavy Industry increased equity incentives, which is a move of confidence, which undoubtedly injected a "booster" into the sluggish construction machinery industry.

The incentives are strong and the coverage is wide　Sany into a "wealth factory"

"Equity incentive + high salary + promotion space = help employees succeed", this is the happiness formula that Sany prescribes to employees.

The equity incentive of Sany Heavy Industry intends to inforce 178 million shares to 2,533 employees, including more than 10 senior executives, including directors, senior managers, middle managers and core business (technical) personnel. According to the total amount of calculation, the 2,533 employees received more than 70,000 incentive shares per capita. The magnitude of this incentive and the breadth of coverage are rare. This kind of "employee stock ownership plan" in the true sense reflects the win-win situation of the enterprise, employees and shareholders.

As the company's middle-level manager, Hu Tiejun of the lean quality department has outstanding performance, and he has made great contributions to the improvement of the company's product quality. After hearing that he had become a member of the equity incentive, Hu Tiejun was overjoyed, he said that this made him more confident in developing with the company, "Now, my efforts have been directly linked to the company's performance, and I have become more motivated." ”

In the face of equity incentives, Liu Cunyong of the Pumping Division of Sany Heavy Industry also expressed the same joy. He is the star product 86Pump trucksHe said that in fact, the company has provided good conditions for employees from the benefits of "clothing, food, housing and transportation" to the training and temporary training abroad. "Now, with large-scale equity incentives, I feel deeply tied to the company."

After the release of the incentive plan, the president of Sany Heavy Industry said frankly to Wenbo: "The development of the enterprise, in addition to better giving back to the society and contributing to the country, should also share the fruits of development with employees. Employees are the blood and cells of the company, and the source of Sany's survival and development. At present, the company's increase in equity incentives will fully stimulate the vitality of employees, inject strong impetus into the development of the enterprise, and create greater returns for shareholders. ”

Xiang Wenbo said that through equity incentives, Sany will create more millionaires, multimillionaires and even billionaires, and then realize Sany's dream of "making a rich factory".

Equity incentives provide an "acceleration engine" for enterprises　Sany has a promising future

Among listed companies, there are many examples of achieving long-term development of the company through equity incentives and creating greater returns for shareholders. All of these companies have one thing in common, that is, the actual net profit growth after the equity incentive is much higher than the net profit growth rate specified in the exercise conditions.

CIMC, the world's largest container supplier of *5655, launched stock option incentives in 2009, and at present, according to the annual reports in recent years, the average annual compound growth rate of net profit after deducting non-profits has reached 53%, especially after the announcement of the incentive plan in 2009, the net profit growth after deducting non-profits in 2010 was as high as 1090.64%.

TCL Group, in early 2011, implemented the equity incentive plan, stipulating that the net profit in 2011 after deducting non-profits increased by 12% compared with 2010, and according to the 2011 annual report, TCL Group's net profit after deducting non-profits was as high as 270% compared with 2010.

SAINT ANGELO, 2005-2007 net profit average annual compound rate of 67.4%, and from the implementation of the stock option program in 2008 can be seen that the annual target of performance is that the growth rate of net profit in 2008 is not less than 15.9% compared with 2007, the growth rate of net profit in 2009 is not less than 9.1% compared with 2008, the growth rate of net profit in 2010 is not less than 8.3% compared with that of 2009, and the actual growth rate of the three years during the exercise period is as high as 55%, 43% and 31.6% respectively.

In response to the equity incentive of Sany Heavy Industry, Guo Qiang, an analyst of *5656 Entrepreneurship* brand, said that on the one hand, the company has a high reputation for product brand and occupies obvious advantages in technology, quality, marketing and service; On the other hand, the company has led the industry in terms of vertical integration and internationalization of the industrial chain, especially through self-construction, acquisition, joint ventures and cooperation, and gradually gained a firm foothold in overseas markets. In the industry adjustment period, Sany's competitive position will be further consolidated, coupled with the favorable factors of equity incentives, the future can be expected.