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Late at night on August 2, Gree Electric Appliances (000651) disclosed nearly 10 announcements, the core content of which was that the company launched the third phase of the employee stock ownership plan. The announcement showed that the number of participants in this plan did not exceed 12,000, and Dong Mingzhu was among them.

Securities Times e-company reporter noticed that Gree Electric chose "return on net assets" as the company-level performance evaluation indicator for the employee stock ownership plan. Compared with the evaluation indicators of the past two employee stock ownership plans, the evaluation indicators are relatively simple.

The announcement shows that the price of purchasing company shares under Gree Electric's third employee stock ownership plan is 20.31 yuan per share (as of the close of August 2, the company's stock price closed at 40.65 yuan per share); the total capital scale will not exceed 1.614 billion yuan, which will be raised by participating employees themselves.

The source of the stocks is part of the shares that have been repurchased in the fourth phase of the repurchase plan in Gree Electric's repurchase special account. On the evening of August 2, Gree Electric simultaneously disclosed that the number of stocks in the company's repurchase securities special account was 109 million shares, of which the company plans to cancel 30 million shares, and the remaining shares (79.4621 million shares, accounting for about 1.41% of the company's current total share capital) will be used for the third phase of the employee stock ownership plan.

The scope of holders of the employee stock ownership plan includes the company's directors, supervisors and senior managers (excluding independent directors), as well as the company and its holding subsidiaries' mid-level managers and core employees who play an important role in the company's overall performance and medium- and long-term development, with a total number not exceeding 12,000. Among them, the company's chairman and president Dong Mingzhu, party secretary and director Zhang Wei, director, vice president and board secretary Deng Xiaobo and other seven directors, supervisors and senior managers have a total subscription ratio of 30%.

It is reported that the holders' meeting is the highest authority of Gree Electric's third employee stock ownership plan. The management committee is elected by the holders' meeting to carry out the daily management of the employee stock ownership plan.

Gree Electric said that Dong Mingzhu has promised not to hold a position on the company's third employee stock ownership plan management committee, and at the same time gave up her personal proposal and voting rights at the holder meeting. Therefore, the third employee stock ownership plan does not constitute a concerted action relationship with Dong Mingzhu and her joint actor Mingjun Investment.

The duration of Gree Electric's third employee stock ownership plan is 3 years, with a lock-up period of 12 months. The assessment indicators are divided into company performance assessment indicators and personal performance assessment indicators. The two corresponding assessment period requirements at the company level: the weighted average return on net assets in 2024 and 2025 shall not be less than 20%. At the end of the first assessment period, if the company's performance assessment indicators are not met, all stocks that have not been attributed in the first period will be deferred to the second assessment period for combined assessment. If the company completes the performance assessment indicators in the second assessment period, and the arithmetic average of the return on net assets for two years is not less than 20%, the Management Committee will combine the results of the individual performance assessment of employees to attribute and distribute the deferred stocks in the first assessment period and the stock rights in the second assessment period.

Data shows that in 2022 and 2023, Gree Electric's weighted average return on equity was 24.19% and 26.53% respectively.

Looking back, the company-level assessment indicators for Gree Electric's first employee stock ownership plan were "annual net profit growth rate and cash dividend amount"; the second employee stock ownership plan added "weighted average return on net assets" on the basis of the above indicators.

As for the reason for launching the third phase of the employee stock ownership plan, Gree Electric said that due to the influence of factors such as the international situation and macroeconomic changes, the company's future development still faces many challenges, and the company needs to gradually improve the employee incentive mechanism to promote the company's high-quality development. This move is to fully stimulate the potential of employees, create greater value, and further improve the interest sharing and risk sharing mechanism between shareholders and management, middle-level cadres and core employees.

According to relevant regulations, Gree Electric's third employee stock ownership plan must be approved by the company's shareholders' meeting before it can be implemented. The company plans to hold the first extraordinary shareholders' meeting of 2024 on August 19 to review the employee stock ownership plan and other related matters.

On the evening of August 2, Gree Electric also issued an announcement on the termination of the second phase of the employee stock ownership plan and the continued fulfillment of the voluntary lock-up period commitment. It is said that the lock-up period of the company's second phase of the employee stock ownership plan expired on February 2, and the holders promised not to sell or pledge their shares before May 1, 2032, otherwise the management committee or the union has the right to dispose of or recover their corresponding shares or income.

Prior to this, Gree Electric announced in November last year that all the shares of its first employee stock ownership plan had been transferred to individual employees or sold through non-transactional transfers, all assets held were cash, and the employee stock ownership plan was terminated ahead of schedule.

Editor: Peng Bo

Proofreading: Ran Yanqing