Bold move! Cross-border sales offer 100 million shares as employee incentives

100 million shares offered as employee incentives in cross-border sales

Major companies adopt various incentive measures to enhance the core strength and cohesion of their employees, among which equity incentives are commonly used.

Recently, a cross-border sales company has offered hundreds of millions of equity incentives to its employees.

Big move! Huabao New Energy launches stock incentive plan

On June 6, 2023, Huabao New Energy Co., Ltd. (hereinafter referred to as “Huabao New Energy”), headquartered in Shenzhen, held its 2023 Equity Incentive Conference.

The Chairman of Huabao New Energy, Sun Zhongwei, officially announced the company’s previously announced “2023 Restricted Stock Incentive Plan (Draft)” at the conference.

According to the announcement, in order to attract and retain outstanding talents, fully mobilize the enthusiasm of the company’s backbone employees and core team, Huabao New Energy will implement a restricted stock incentive plan for core management personnel and core backbone personnel working for the company. It plans to grant approximately 3.3822 million shares of restricted stock to incentive objects at a price of 40.12 yuan per share, accounting for 2.71% of the company’s total share capital of approximately 125 million shares.

It is understood that Huabao New Energy’s equity incentive plan is initially granted to a total of 111 people, mainly core management personnel and core backbone personnel working for the company, excluding independent directors, supervisors, shareholders or actual controllers and their spouses, parents, and children who hold 5% or more shares of the company individually or in aggregate. Based on the different entry times of the incentive objects, they are divided into two categories: A and B.

On the day of the equity incentive conference, the stock price of Huabao New Energy was 77.88 yuan/share. If it is purchased at 40.12 yuan/share, it is almost equivalent to letting employees buy shares at half price. Huabao New Energy’s total expenses to be amortized are about 128 million yuan. It has to be said that Huabao New Energy has indeed made a big move.

However, for eligible employees, it still takes time and conditions to successfully hold shares.

This equity incentive plan assesses the three accounting years from 2023 to 2025, and the performance assessment targets only involve operating income, not net profit representing profitability.

The performance assessment targets are all based on the operating income in 2022. The target for 2023 is a growth rate of no less than 10% in operating income, the target for 2024 is a growth rate of no less than 27% in operating income, and the target for 2025 is a growth rate of no less than 45% in operating income.

According to the financial report data previously released by Huabo New Energy, the company’s revenue in 2022 was RMB 3.203 billion, a year-on-year increase of 38.35%; the net profit attributable to the parent company was RMB 287 million, a year-on-year increase of 2.64%; and the non-recurring net profit was RMB 271 million, a year-on-year increase of 0.46%.

This means that the assessment of Huabo New Energy’s equity incentive plan in the past three years will all be based on the 2022 revenue of RMB 3.203 billion.

However, in the first quarter of 2023, Huabo New Energy’s revenue showed a significant decline, lower than market expectations.

In the first quarter of 2023, Huabo New Energy achieved revenue of RMB 448 million, a year-on-year decrease of 26.77% and a quarter-on-quarter decrease of 53.94%.

At the same time, in the first quarter, Huabo New Energy’s non-recurring net profit was approximately -RMB 45.6825 million and net profit was approximately -RMB 29.6729 million, turning from profit to loss year-on-year.

Regarding the reason for the significant decline in performance, Huabo New Energy stated that the first quarter is usually the off-season for the company’s product sales, and with the normalization of the energy crisis, consumer shopping tends to be rational, and the company’s sales revenue in the first quarter has returned to normal levels.

There is speculation in the industry that this equity incentive plan may be related to the decline in Huabo New Energy’s revenue and profit in the first quarter.

Haineng Industry Grants 1.725 million Restricted Stocks to Employees

Equity incentives are one of the most commonly used means of retaining core talent by cross-border e-commerce sellers. If the equity incentive assessment established by the seller is achieved, employees can obtain unlocked stocks and profits. However, if the assessment is not met, employees can obtain the original capital and interest of the bank deposit. This is very beneficial for both parties.

In addition to Huabao New Energy, Haineng Industry recently launched an equity incentive plan for core employees.

Haineng Industry used June 5, 2023 as the first grant date, granted 1.725 million restricted stocks to 34 incentive objects who met the first grant conditions at a grant price of 10.01 yuan/stock.

On June 5, Haineng Industry’s stock price was 20.30 yuan/stock. If purchased at 10.01 yuan/stock, it is basically half-priced, and the total cost that Haineng Industry will amortize is about 17.75 million yuan.

It is understood that the incentive objects of Haineng Industry’s equity incentive plan are core technical personnel and other core backbones serving in the company’s (including subsidiaries) energy storage product line, excluding company directors (including independent directors), supervisors, senior management, shareholders or actual controllers who hold more than 5% of the company’s shares and their spouses, parents, children, and foreign employees.

The assessment is for the three accounting years from 2023 to 2025, and there are different assessment targets for different attribution periods, as shown in the following figure:

Haineng Industry Co., Ltd. was established in July 2009 and listed on the Shenzhen Stock Exchange in August 2019.

The main products of Haina Industrial cover three major categories: consumer electronics, new energy, and smart home. They are applied in the fields of smart mobile communication, audio-visual equipment, PCs, smart wearable devices, and various electronic terminal products.

As a well-known 3C accessory product export enterprise in the industry, Haina Industrial’s operating revenue and net profit have both rapidly increased in the past three years, and it has maintained a good development trend.

From 2020 to 2022, the company’s operating revenue will be 1.566 billion yuan, 2.08 billion yuan, and 2.386 billion yuan respectively; the net profit attributable to shareholders of the listed company will be 114 million yuan, 186 million yuan, and 326 million yuan respectively.

Moreover, Haina Industrial’s profitability is excellent and ranks among the top in the industry.

As an electronic manufacturing enterprise, Haina Industrial is relatively dependent on talent. The stock incentive plan launched by Haina Industrial this time is also conducive to the company’s future development.

Regarding stock incentives, many large companies have already implemented them. Not only Haina Industrial and Huabao New Energy, but also a group of large companies such as Huakai Yibai, Xinghui Shares, Cross-border Communication, Jihong Shares, Ausen E-commerce, and XGIMI Technology have all spent millions or even tens of millions of shares on stock incentives.

For listed companies, stock incentives are nothing more than wanting to encourage company executives to use all their talents and energy to actively strive for the company’s performance growth goals. Doing a good job of stock incentives can make employees work harder and be more conducive to the future development of the enterprise.

From the average data analysis given by these large companies, as long as the incentives are real, the effects achieved are basically positive. Some sellers say, “I have not seen any actual negative cases.” There may be occasional negative cases affected by external factors in the future.

Talent is the key factor for stable development of a company. Many successful companies have tried their best to retain their talents. These companies propose equity incentives to their core employees, which to some extent proves their sincerity in retaining talent. This can also fully mobilize the enthusiasm and creativity of employees, which has a very important driving role for the future development of the company.

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