CHINA: Qingdao Haier Comes with New Stock Option Plan - 19 Oct 2009

Qingdao Haier Comes with New Stock Option Plan

QINGDAO, Oct 19, 2009 (SinoCast Daily Business Beat via COMTEX) -- TTHEF | Quote | Chart | News | PowerRating -- After ups and downs, a new stock option plan was passed by shareholders of Chinese home appliance heavyweight Qingdao Haier Co., Ltd. (SHSE: 600690) on Sep. 30 based on the plan mapped out in 2006.

Three years ago, Qingdao Haier planed to grant stock options to select staff, joining a growing list of state firms to reward managers with shares. It hoped to place 80 million shares, or 6.69% of its share capital, with its top managers and select employees. Chairman Yang Mianmian will receive 3 million share options.

The new plan shows that Qingdao Haier will place 17.71 million shares as stock options, accounting for 1.323% of its total shares. The exercise price is CNY 10.88. The chairman will get 2.25 million share options.

To exercise the options, the company's annual net profit growth rate must not be lower than 18% and yield on net assets must not be less than 10%. Now the two indicators at Qingdao Haier stand at 14% and 8%, respectively. Employees receiving share options will have five years to exercise the options in four tranches at CNY 10.88 per share.

Analysts say the changes in the new plan reflect the great belief of the management in the prospect of the company.

The new plan covers 49 directors, high executives, and core technicians. The two plans have one thing in common: they both do not include Zhang Ruimin, CEO of Haier Group. Qingdao Haier explains that the stock option plan is limited to the listed company and is not relevant to the group.

The new stock option plan is meant to enhance corporate governance, stimulate the performance of the company's top managers and core staff, and effectively boost up the interest of shareholders.

After launching the stock option plan, Qinghao Haier is expected to increase its holdings in Haier Electronic Group in a bid to balance the while home appliance business of the group. But it will raise it above 30%.

It is worth noting that Haier Electronic Group Co., Limited (SEHK: 01169) made a statement on Sep. 14 that it was going toward setting up a subsidiary in Hong Kong with a total investment
of HKD 80 million, which will specialize in expanding the company marketing, logistics and online sales in smaller Chinese cities.

An analyst form CITIC Securities notes that the establishment of the Hong Kong company will be a sign that the two listed company will continue their asset integration.

Qingdao Haier engages in manufacturing of air conditioner, refrigeration, freezer and household appliances. It produces a wide range of household electrical appliances in 96 categories with 15,100 specifications and export products to more than 160 countries.

(USD 1 = CNY 6.83)

Source: www.hexun.com (October 19, 2009)

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