On the evening of June 20, Gree Electric released the “Phase 1 Employee Stock Ownership Plan (Draft)”. This announcement shows that the total number of employees participating in Gree’s employee stock ownership plan does not exceed 12,000, involving company executives, middle-level cadres and employees in key positions. It is the largest employee stock ownership plan in Gree’s history. According to Gree’s plan , There will be several rounds of shareholding plans in the future.

The source of the shares held by the plan is the shares that have been repurchased in the special repurchase account of Gree, and the size of the shares does not exceed 108,365,800 shares. Moreover, employees participating in the shareholding plan will subscribe for shares at a price of 27.68 yuan per share. If calculated according to Gree Electric’s closing price of 53.68 yuan per share on June 18, the employee’s share price is about 51.56% of the current closing price.

This means that Gree employees participating in this shareholding plan can buy shares at half price. However, with the introduction of this plan, some people have also questioned this. In addition to the ups and downs of Gree during this period, Miss Dong is in What are the calculations?

Gree Electric, keen to give employees “benefits”

A few days ago, Dong Mingzhu announced that the first batch of 3,700 houses in the “Gree Pearl Plaza” in Zhuhai will soon be delivered. For a time, Gree was in the limelight. The news that “Gree wants to divide the house” was reported by major media, and many people believed that Dong Mingzhu did what he said.

In fact, as early as 2018, Dong Mingzhu publicly stated: “Gree will provide 80,000 employees with two bedrooms and one living room. As long as employees work until they retire, they don’t have to worry about housing prices.” At that time, the Zhuhai municipal government encouraged Gree Electric Appliances. , Promised to provide 10,000 sets of housing land.

In February of this year, Dong Mingzhu said in an interview with the media that Gree will be able to put out 3,700 houses immediately, with one set of scientific research personnel. As long as they can work in Gree until they retire, the house belongs to him. However, Dong Mingzhu also talked about Gree’s house allocation in an interview with the media on June 16th: “I originally wanted to retire and this house will belong to you, but many of our young people said that it has been too long. I can’t give the house now or sell it at half the market price. I finally decided to sell it to them at cost.”

Picture from Gree’s official website

Although there are many restrictions, it is normal. After all, there will be no free pies in the sky. Compared with the division of houses, Gree’s employee shareholding plan this time has received a lot of doubts once it was announced. Among them, the most concerned is Dong Mingzhu’s shareholding ratio.

According to the plan in the plan, Gree Electric’s chairman Dong Mingzhu plans to subscribe for 30 million shares, accounting for 27.68% of the shareholding plan, and plans to invest 830 million yuan. Six executives including Zhang Wei and Zhuang Pei will subscribe for 600,000 shares. The employee supervisor Wang Fawen subscribed for 80,000 shares. As for the remaining 74,685,800 shares, 1,1992 middle-level cadres and core employees plan to invest 2.067 billion yuan to subscribe.

To put it simply, Dong Mingzhu invested 830 million yuan and subscribed for 27% of the shares of this shareholding plan. From the stock price point of view, Dong Mingzhu made a “small profit” of 800 million, and most of the remaining shares were among middle-level cadres. The backbone of the enterprise subscribes. In other words, this employee stock ownership plan and the previous employee housing may be Gree Electric’s intention to “stabilize the military” and want to deeply bundle the company’s core talents by “distributing benefits” to employees. After all, Miss Dong once said: “ Talent is Gree’s greatest wealth.”

Gree’s disintegrating “iron triangle”

From a market perspective, the subscription price of Gree’s employee stock ownership plan is very low. The employee subscription price is only half of the market price, which is obviously unacceptable for investors who buy stocks from the secondary market. . After the announcement, Gree Electric’s share price fell 4.79% at the close of trading on June 21. At the risk of being attacked by the market, Gree Electric will also implement this plan, naturally because of the problem of brain drain. Perhaps the most famous of these is the disintegration of Gree’s “Iron Triangle”. On the evening of February 21, Gree Electric issued an announcement stating that it had received a written resignation report from Director and CEO Huang Hui and resigned from Gree Electric’s director and CEO positions. After Huang Hui resigned, he no longer held any position in Gree. In the three and a half years as the CEO, Huang Hui has been Gree’s second-in-command. Together with Chairman Dong Mingzhu and Chief Financial Officer Wang Jingdong, he was known as the “iron triangle” of Gree Electric. Before Huang Hui, Gree Electric’s director, vice president and secretary of the board Wang Jingdong also resigned from all positions in Gree in August last year due to personal reasons. Regarding the resignation of the two, some people in the industry believe: “The two of them have been in Gree for so many years and have been very loyal to Gree, but now they have left. This means that both Wang and Huang are in agreement with Dong Dong’s current development ideas for Gree. Mingzhu has a disagreement.” Moreover, Huang Hui joined Gree Electric in 1992 and is a senior executive of Gree Electric. The outside world once believed that Huang Hui was expected to succeed Dong Mingzhu as the next head of Gree Electric. In addition to the departure of the two core executives, according to media reports, Gree Electric’s personnel flow is also very large. Gree Electric, where the executives left, is in an eventful period. In the past 2020, due to the impact of the new crown epidemic, the financial report of Gree, which mainly attacked offline channels, was not very good, and it was precisely because of the impact of the epidemic on offline channels that Gree’s “air-conditioning king” throne was once taken away by Midea. The financial report shows that Gree Electric’s 2020 revenue fell by 14.97% to 170.497 billion yuan, achieving a net profit of 22.175 billion yuan attributable to the parent, a year-on-year decrease of 10.21%. From the perspective of revenue, Gree’s 2020 results are obviously not good. Although Gree has been carrying out transformation and reforms in recent years, many people’s first impression of Gree is still “selling air conditioners.” In a sense, it is true. Gree’s transformation and reform did not help Gree cultivate a high-quality business like air conditioners. According to Gree’s 2020 mid-year report, Gree accounted for the bulk of the air-conditioning business, accounting for nearly 60% of its revenue, and household appliances and smart equipment accounting for 3% and 0.3%, respectively. In the same period, Midea’s air-conditioning revenue accounted for 46%, and consumer appliances accounted for 38%.

Is it good to rely on stocks to win people’s hearts?

The dilemma of Gree Electric Appliances made Dong Mingzhu begin to seek change, and began to reform the sales channels that have not been lost. From the previous offline model, to the new Gree retail model of “simultaneous online and offline sales and integrated service”. Even if the provincial agency dealers are unwilling, the channel transformation has become an irresistible trend. Dong Mingzhu even went into battle himself and held more than a dozen live broadcasts to bring the goods. However, the low revenue performance in 2020 has also made the requirements of this equity incentive plan aroused by investors. Many investors believe that the incentive conditions this time are too simple, almost equivalent to nothing. Gree has requirements for company-level and personal-level performance in this employee stock ownership plan. As for employees, the individual performance appraisal results are required to reach level B or above in order to get all the shares. The level C can only get 80%, and the shares below the C level cannot get the shares. Gree will also return the corresponding original funds. At the company level, if the company’s performance evaluation fails to meet the standards after the expiration of the second evaluation vesting period, the management committee will make a decision to dispose of it, including canceling or selling stocks at an opportunity. The amount will be limited to the amount of disposal, and the corresponding holders will be refunded. The original capital contribution and the remaining income (if any) are returned to the company. Picture from Canva, ready made It should be noted that Gree’s assessment indicators for this plan are based on 2020 performance as a reference, but according to the financial report, Gree’s revenue in the first quarter of this year was 33.189 billion yuan, a year-on-year increase of 62.73%. Net profit was 3.443 billion yuan, a year-on-year increase of 120.98%. If this level can be maintained, the implementation of Gree’s shareholding plan will obviously not be particularly difficult compared to the results of 2020. However, similar to employee housing, Gree employees’ stocks can only be sold after retirement, and they can only enjoy dividends before retirement. For employees, this regulation largely restricts the behavior of employees selling stocks. For investors in the secondary market, it is obviously unacceptable for investors in the secondary market to spend real money to buy stocks in full, and now others only need to spend half of it to buy, and there is almost no risk. The selling restrictions may also be to cater for the emotions of investors. For Gree Electric, this approach of pulling in the backbone of the company may be compelling, but for Gree employees, this subscription is too far away from the perspective of time when the ban is lifted after retirement

That is to say, only when the Gree station is “high enough”, will there be this good news. Moreover, although this shareholding plan stipulates that employees can subscribe for Gree Electric’s shares at a 50% discount, Gree’s The employee stock ownership plan also sets a strict performance appraisal period. The evaluation indicators of the employee stock ownership plan are divided into company performance evaluation indicators and individual performance evaluation indicators. Among them, the company’s performance evaluation indicators are as follows: The lock-in period of the employee plan is 12 months, and the company’s performance evaluation indicators are based on 2020 as a reference benchmark. Among them, the company’s performance appraisal indicators are: the net profit of 2021 is compared with that of 2020 Increase not less than 10% , And the current year’s cash dividend per share shall not be less than 2 yuan or the total cash dividend shall not be less than 50% of the current year’s net profit; the net profit in 2022 will increase by not less than 20% compared to 2020, and the current year’s cash dividend per share shall not be less than 2 The total amount of RMB or cash dividends shall not be less than 50% of the net profit for the year. Gree Electric stated that the first assessment vesting period expires, and if the company’s performance assessment indicators do not meet the standard, the combined assessment will be deferred to the second assessment vesting period. If after the expiration of the second assessment vesting period, the company’s performance assessment fails to meet the standards, the management committee will make a decision to dispose of it, including cancellation or sale of stocks at an opportunity, etc., and the original capital contribution paid by the corresponding holder will be returned to the limit , The remaining income (if any) is returned to the company. That is, if the company’s performance evaluation indicators are not completed, everyone will not be able to enjoy the rights; if the company’s performance evaluation indicators are met, and the individual performance evaluation does not meet the standards, the individual will not be able to enjoy the rights. In addition, this provision is also mentioned in the employee stock ownership plan: Based on the needs of employees to increase stock appreciation gains and participate in corporate governance through centralized management, the holders of this employee stock ownership plan promise and authorize that they will directly hold the stock rights of this employee stock ownership plan before retiring from the company to their personal securities accounts. For some stocks, the union shall exercise the voting rights according to the will of the union (excluding the voting rights of the shares held by directors, supervisors, and senior managers). Without the prior written confirmation of the union, the union shall not sell or set a pledge on its own, otherwise the union has the right to withdraw it. The corresponding share income, related income is managed by a special account set up by the trade union and enjoyed by other holders, and the specific distribution method is democratically determined by the holders. To put it simply, Gree stated that this employee plan requires the holder’s commitment and authorization, and it is not possible to withdraw at will. The company enjoys the right to dividends before retirement, and the ban on sales can be lifted after retirement. As a result, it also largely restricts the behavior of employees selling stocks at will. It seems that in the face of this seemingly good employee stock ownership plan, Gree has many barriers to get it. Having said that, Gree’s “boots are on the ground” when it allocates employee housing some time ago to be delivered soon, but this time reading the content of Gree’s latest announcement, it is not difficult to see a big change in attitude. What’s more noteworthy is that Gree’s share price has fallen by four percentage points as of 11 am today. Gree’s market trend today clearly shows The capital market’s opposition to employee stock ownership plans. Finally, I would like to mention that this time the employee stock ownership plan, Dong Mingzhu made a floating profit of 800 million, Who is the big winner in the end? People may have thought of it…

Dong Mingzhu immediately responded positively on the spot. Someone just said, “I haven’t been allocated a room for five years.” You have to ask why you haven’t been allocated a room? She said that Gree’s goal of housing allocation has never changed. Our dream is to allow every employee to own a suite. This year we have 3,700 units. The first batch of units will be given priority to our excellent employees, but the ones that are not excellent are also Will give, just wait slowly. As long as you are good enough, you can get priority.

Today Dong Mingzhu officially announced from the media that Dong Mingzhu’s promise of giving Gree employees one person, one house is really fulfilled. Since the foundation stone was laid in 2018, Gree Pearl Plaza’s talent housing has always attracted attention. Currently, the first batch of more than 3,000 employee housing units will soon be delivered, and the surrounding commercial districts and kindergartens are also intensively speeding up the construction.

IT House learned that Gree said that this talent apartment is the first phase, and it is necessary to ensure that every employee is a talent who contributes to the society, the country, and Zhuhai. With the construction of Gree Electric, everyone has a suite.

Dong Mingzhu once said: “Entrepreneurs must not only have the feelings of family and country, but also have social responsibilities, and more importantly, they must have the spirit of love to nurture generations of young people into talents, so as to allow our Chinese manufacturing to develop in an orderly manner. To serve the world.”

Gree, founded in Zhuhai in 1991, has now become an aircraft carrier in China’s air-conditioning industry. But just a dozen years ago, Gree faced the danger of being sold to the Americans. Thinking of it, it makes people sweat.

In July 2005, the media suddenly exposed the news that “Carrier will acquire Gree Electric.” Although the Zhuhai State-owned Assets Supervision and Administration Commission quickly came forward to refute the rumors, the matter was definitely not groundless. “At that time, an official from the State-owned Assets Supervision and Administration Commission of Zhuhai who was interviewed by the “Chinese Entrepreneur” said: “Almost all companies that can come have come. Who doesn’t want to get Gree.” ”

At that time, Gree Electric’s restructuring was entering a very sensitive stage, and the Zhuhai municipal government was also hesitant about how to choose. Gree’s restructuring work began in 2003. Although Gree Group held 58.66% of Gree Electric’s equity, the restructuring work was still directly managed by the municipal government.

At that time, the Zhuhai Municipal Government had different opinions on how Gree should restructure. The party headed by the Secretary of the Municipal Party Committee at the time advocated introducing a major shareholder for Gree Electric. As long as the major shareholder can ensure that Gree Electric will remain in Zhuhai, it will be fine even if it is bought by foreign capital. The other faction is opposed to the shareholding of Gree Electric. Sold to foreign investors.

The party that agreed to sell Gree to foreign investors used the example of Shenzhen Water Group’s restructuring as a magic weapon. Two years ahead, Shenzhen sold its 45% stake in Shenzhen Water Affairs Group to the French Veolia Water Group at a price of US$400 million, and the restructuring was a success. Many people from the Zhuhai Municipal Party Committee and Municipal Government were very interested in this experience in Shenzhen. If a Fortune 500 company can be introduced to buy Gree, this will be a highlight for the political achievements of the ruling party, and it can also change Zhuhai’s backwardness in attracting foreign investment in the province at that time.

Soon after the news of Gree Electric’s equity transfer came out, a large number of foreign companies flocked to it. Companies that have expressed strong interest in equity transfers include internationally renowned companies such as American Carrier and Japan’s Daikin. Through a period of inspection, the Zhuhai Municipal Government has been more active towards the American Carrier Group, the company founded by the inventor of air-conditioning Willis Carrier, but these details have always been kept secret from Gree’s senior management.

In July 2005, when the Carrier Group launched an investigation before the acquisition of Gree, the Zhuhai Municipal Government revealed the acquisition plan to Gree’s management. The shock and resistance of then chairman Zhu Jianghong and general manager Dong Mingzhu can be imagined. .

In the life and death of Gree Electric, Dong Mingzhu showed the demeanor of an “Iron Lady”. She directed the staff to prevent the investigators of the Carrier Group from entering Gree’s gate, and she immediately went to Guangzhou to find Zhang Dejiang, then Secretary of the Provincial Party Committee, and told Secretary Zhang the pros and cons of the “national brand” of Gree being sold.

In Secretary Zhang’s office, Dong Mingzhu burst into tears: “Although American Carrier is a Fortune 500 company in the world, if we sell them to them, our domestic products are gone! Gree is small, but it has a future!” When it comes to excitement, she even said Slapped the table.

The result of this three-hour battle based on reason is that Secretary Zhang sent a provincial investigation team to investigate the acquisition of Gree Electric.

In fact, 2005 was a year of great strides for Gree Electric. Gree was the only representative of the home appliance industry on the “Top 500 Taxpayers in China” and “Top 500 Taxpayers of China’s Listed Companies” announced by the State Administration of Taxation in the first year. . Compared with the annual production capacity of 20,000 units when the company was founded, it has doubled by 140 times.

Dong Mingzhu is an ambitious woman. She has said in public many times: “We hope Gree can become a global brand. South Korea can cultivate a global brand like Samsung. Doesn’t China have the ambition to cultivate its own brand?” Under her leadership, Gree Electric took the lead in successfully developing With the “centrifuge” technology, it has completely independent intellectual property rights.

Dong Mingzhu is very supportive of the corporate restructuring, but she is not willing to sell Gree to Americans one hundred and twenty. Although Carrier has strong capital and leading technology, as well as a global sales network, she believes that this has no meaning to the improvement of Gree’s competitiveness. As she said in front of the secretary of the provincial party committee: “Gree has no shortage of funds, technology, and global sales network. Gree does not have a penny loan in the bank, and has good financing and technical capabilities. Gree’s global sales network is not inferior to that of Americans.”

At that time, Gree was about to reach the top of the home appliance industry. If it was acquired by the Americans, what would be waiting for Gree, Dong Mingzhu knew very well. Wasn’t Kelon also “the world’s best SME”? What happened after being acquired?

Dong Mingzhu is very clear that if Carrier acquires Gree, it will reverse the decline of foreign air-conditioning manufacturers in the Chinese market and become a strong oligarch in the Chinese air-conditioning market overnight. Once the acquisition is successful, Carrier can OEM production, greatly reduce costs, and deliver its products to every corner of the Chinese market through Gree’s blood vessels.

Regarding the restructuring, Dong Mingzhu’s plan is for Gree Electric to strive for a pilot “full-tradable share reform” and reduce state-owned shares to the public. This is also a key share reform project in Guangdong Province. However, some leaders in Zhuhai at the time were hesitant to “share reform” and insisted on selling Gree.

This is the moment of survival for a national brand. In order to succeed in the acquisition, the Carrier Group made a private promise to Dong Mingzhu: After the acquisition of Gree, she will continue to serve as the general manager, with an annual salary of 80 million yuan. Dong Mingzhu’s answer was eloquent: “I won’t agree with an annual salary of 800 million yuan!”

Everyone, what is the concept of an annual salary of 80 million in 2005? Even today, Dong Mingzhu’s annual salary is not two million, and 80 million is an astronomical figure for her. But Dong Mingzhu was not overthrown by sugar-coated shells, she wanted to turn the tide.

With the support of the main leaders of the province, the Zhuhai governing officials who advocated the introduction of foreign capital were removed, and Carrier’s plan to acquire Gree was aborted. The agreement to transfer equity has become Gree Electric’s choice.

Gree’s secretary of the board of directors said: “Entering the equity division platform, the pricing of state-owned assets is completely market-oriented, and the opportunity for cheap sales is immediately reduced. Gradually reducing state-owned shares through the secondary market can completely avoid the fate of foreign acquisitions.

In September 2006, Dong Mingzhu was appointed as a director of Gree Group, and then took over as chairman in 2012. Gree Electric has completely entered the “Dong Mingzhu era”. In this year, Gree Electric’s sales exceeded the 100 billion mark, becoming the first company in my country’s home appliance industry to rely on a single product to exceed the 100 billion mark in sales. Her oath of “recreating a Gree in five years” was also fulfilled.

Let’s go back and take a look at the American company that is preparing to acquire Gree!

On November 15, 2011, Midea Electric completed the acquisition of a 51% stake in Carrier’s air-conditioning business in Latin America and took over the air-conditioning business of Carrier in Latin America. Fang Hongbo, Chairman and President of Midea Electric pointed out: Holding the control of Carrier’s Latin American air-conditioning business is one of Midea’s global strategies. After the completion of this merger, Midea’s overseas manufacturing capabilities will be further strengthened.

In the announcement of the acquisition of Carrier, Midea Electric said: “In the long run, the global air-conditioning market will gradually evolve into a duopoly of Gree and Midea.” But Midea also admits that from the perspective of air-conditioning projects, Gree Bi Midea’s internationalization The process is one step faster. In recent years, the proportion of Gree’s own brand exports is much higher than that of Midea, and its influence has basically been established in overseas markets, especially European and American markets.

Gree people will never forget Dong Mingzhu’s generous statement on the board of directors: “The annual salary that Carrier offered me is too tempting, but I can’t accept it. Because the acquisition means Gree’s failure! Carrier is the world today. Fortune 500, but Gree will be tomorrow’s top 500! Give me 20 years, wouldn’t it be better for us to build the Fortune 500 ourselves?”