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Qingdao Haier to award 80 million shares as incentive to executives

Qingdao Haier to award 80 million shares as incentive to executives

Qingdao Haier Co., a unit of China's biggest appliance maker, will offer 80 million new shares to executives to spur performance, the latest Chinese company to do so since regulators began approving such incentives this year.
Executives have the option to buy the shares, representing 6.7 percent of Haier, at 7.63 yuan each, the Qingdao, east China- based company said yesterday in a statement to the Shanghai Stock Exchange. Haier shares rose 7.5 percent to 8.20 yuan after surging almost by their 10 percent daily limit.
Stock awards by Baoshan Iron & Steel Co., ZTE Corp., and other Chinese state-owned companies will better protect the interests of investors by linking executive compensation with share performance, said Randy Zhou, an analyst with Bank of China International in Shanghai. ZTE, China's biggest publicly listed telephone equipment maker, in October was the first company to receive regulatory approval for its incentives plan.
"This is a step forward for the Chinese stock markets as they align more with international standards," Zhou, who rates Haier's shares "outperform," said today by telephone. "Incentive plans will be very beneficial for investors."
Haier, which makes refrigerators and air conditioners, also said today it aims to raise annual profit by at least 10 percent in the next three years. The company also plans to set up a new sales unit with 10 million yuan of registered capital and a unit that makes air conditioners in southwestern China's Chongqing city with 65 million yuan in registered capital.
Haier's stock doubled in value this year, performing in line with the Shanghai Stock Exchange Composite Index, which surged 109.8 percent in the same period to a record after the government pushed forward plans to convert more than US$200 billion of non- tradable state-owned stock into common shares.
China's public companies, among the world's worst stock market performers in 2005, were able to offer share incentives from Jan. 1, involving up to 10 percent of a company's equity.
Before the change, managers at state-owned companies couldn't benefit from an increase in their company's share price, contributing to a series of asset-stripping and corruption scandals. China's stock market lost more than half its value between June 2001 and July 2005.
Chinese corporate executives who work for state-owned companies such as Haier are typically paid a fraction of the salaries enjoyed by executives in the U.S., Europe or Japan.
Haier's profit fell 10.8 percent on average every year since 2001, when Yang Mianmian was named the Chinese company's chairwoman. Yang was paid 160,000 yuan (US$20,450) in salary last year, according to the company's annual report.
Whirlpool Corp., the world's biggest appliance maker and five times bigger than Haier by market value, paid chairman Jeffrey Fettig US$983,000 in 2005 salary and awarded him almost US$2 million in additional compensation. Whirlpool's profit rose 2.8 percent on average over five years to US$422 million in 2005.
Haier's Yang, who owned 55,760 of the company's shares at the end of 2005, will receive options for 3 million shares to be exercises in three phases over seven years, according to the company's statement yesterday.
The Chinese company's annual profit fell to 239.1 million yuan at the end of 2005, from 617.8 million yuan in 2001. Sales surged almost 28 percent every year in the same period to 16.48 billion yuan last year.
Haier's profit for the first nine months of 2006 rose 26 percent from a year earlier to 268.6 million yuan. Sales rose 10.5 percent to 14.7 billion yuan.


Updated : 2020-12-04 05:25 GMT+08:00