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delinhai (688069)’s plan to provide “benefits” to core employees including actual controller hu mingming encountered obstacles.

securities times e-company reporter noticed that at the company's second extraordinary shareholders' meeting in 2024 held on september 5, all incentive-related proposals were rejected. analysis of the voting results shows that small and medium shareholders defeated the company's second largest shareholder, chen hong, and influenced the voting results of this shareholders' meeting.

the three proposals of delinhai's shareholders' meeting are all related to the equity incentive plan, and the voting results are similar, with votes in favor accounting for about 57% of the number of votes held by shareholders attending the meeting, and votes against accounting for about 42%, with a small number of abstentions. these three proposals involve special resolutions and must be approved by more than two-thirds of the total number of voting shares attending the shareholders' meeting.

among them, the voting results for the first proposal were: 13.9906 million shares in favor, accounting for 57.4085%; 10.3734 million shares against, accounting for 42.5658%; 6,259 shares abstained, accounting for 0.0257%. among the votes in favor, 2.8822 million shares came from small and medium shareholders; all the votes against and abstentions came from small and medium shareholders. excluding the votes from small and medium shareholders, 11.1084 million shares (accounting for 9.68% of the company's total share capital) came from shareholders holding more than 5% of the shares, which is exactly the same as the shareholding of the company's second largest shareholder, chen hong.

judging from the voting results of delinhai’s previous shareholder meetings, there were very few votes against, and even several shareholder meetings had zero votes against. this shows that small and medium-sized investors are indeed not very satisfied with the company’s incentive plan. what kind of incentive plan is this?

previously, delinhai launched an incentive plan in mid-august, intending to grant 2.0222 million restricted shares to 27 incentive targets at a price of 7.32 yuan per share. the grant price accounted for about 50.03% of the average trading price of the company's stock in the 120 trading days before (the launch of the plan); and about 53.12% of the average trading price of the company's stock in the previous trading day.

regarding the reason for the "half-price" incentive, the listed company stated that the pricing method is based on the fundamental purpose of promoting the company's development and safeguarding the interests of shareholders. it is based on confidence in the company's future development prospects and recognition of its intrinsic value, and is based on the principle of equal incentives and constraints.

among the 27 incentive targets, hu mingming, the chairman and general manager of delinhai and the actual controller of the company, is expected to be granted 709,200 restricted shares (the same below), accounting for 35.07% of the total number of shares granted. a total of 12 people including ma jianhua, sun yang, the company's directors, liu yanping, the secretary of the board, and other senior executives and core technical personnel were granted 50,500 shares each. 14 middle-level managers and business backbones were granted a total of 707,000 shares.

as for the reason for including the actual controller in the incentive object, de linhai said that hu mingming holds several positions, and his multiple identities and functions give him a pivotal position in the company's operations. as the company's core leader, he has a significant impact on the company's management and has made significant contributions to the company.

as of the end of june, hu mingming directly held 45.08 million shares of delinhai, with a market value of approximately 646 million yuan. in 2023, he received a pre-tax salary of 529,900 yuan from the company. as an incentive target, hu mingming, as a shareholder associated with the proposal, needs to abstain from voting. this leaves chen hong alone to fight against small and medium shareholders at the shareholders' meeting.

the assessment year of delinhai's above incentive plan is the three fiscal years from 2024 to 2026, and the assessment indicators are divided into company level and individual level. at the company level, in 2024, the company must meet one of the following two conditions: operating income is not less than 372 million yuan; net profit is not less than 40 million yuan. the net profit indicator is calculated based on the net profit after excluding the share payment expenses generated by the company's incentives and employee stock ownership.

in the first half of this year, delinhai's operating income was 205 million yuan and its net profit was 24.7719 million yuan. in the semi-annual performance profit announcement, the company said that its orders on hand totaled 637 million yuan by the end of june, an increase of about 23.20% over the same period last year; and the new orders on hand in 2024 were 266 million yuan, an increase of about 246% over the same period last year. from this point of view, it should not be difficult for it to complete the annual company-level assessment.

delinhai is mainly engaged in services such as endogenous control of lake eutrophication and cyanobacteria control, and was listed in july 2020.

in 2021, delinhai launched its first incentive plan after listing, and plans to grant 190,000 restricted shares to incentive targets at a price less than 50% of the then stock price. the company-level performance evaluation requirements are: based on the net profit in 2019, the net profit growth rates in 2021 and 2022 shall not be less than 96% and 174% respectively.

however, delinhai's performance continued to decline in 2021 and 2022, and its net profit growth rate did not reach the above-mentioned company-level performance assessment target. in the end, all 190,000 restricted shares granted to the incentive targets were invalidated.

proofreading: liao shengchao