Two consecutive quarters of positive net profit growth, showing that this well-known telecommunications equipment supplier after showing a huge loss last year, showing a trend of good performance.
The equity incentive plan announced by ZTE on the same day is also an endorsement of this trend to some extent. This includes 1,531 key stock option plans, including no loss during the plan's validity period, and a net profit growth rate of not less than 20%.
"The telecommunications equipment market is ushering in 4G opportunities, and the smartphone and enterprise network markets are also facing an important time window." ZTE President Shi Lirong said that ZTE hopes to use this equity incentive plan to activate internal vitality in order to seize current external opportunities Company transformation provides human support.
"Double assessment" mechanism
"ZTE lost money for the first time last year, and its share price also hit a new low." Chen Jianzhou, senior vice president and CIO of ZTE, revealed in an interview with reporters that the company's backbone and core business personnel have also experienced an increase in the loss rate of the company's core and core business personnel in the face of greater operating pressure last year Subjectively, the company needs to adopt a series of measures to maintain its attractiveness to employees.
According to the "Stock Option Incentive Plan (Draft)" officially released by ZTE on July 22, it will grant 1031 million stock options to 1531 incentive objects at a time, accounting for 3% of ZTE's total share capital.
The equity incentive plan is valid for 5 years, of which, 2 years from the date of stock option grant is the waiting period, and 3 years after the waiting period is the exercise period. During the exercise period, if the exercise conditions stipulated in the plan are met, the incentive object can apply for exercise three times in total of 30%, 30%, and 40%, with an exercise price of 13.69 yuan (that is, the board of directors of ZTE Corporation to review the equity incentive plan is convened The closing price of the A-share stock on the trading day before the day before).
Feng Jianxiong, ZTE's director general, told reporters that the exercise of the option plan is subject to a "dual assessment system." On the one hand, the net profit attributable to shareholders of the listed company and the net profit attributable to shareholders of the listed company deducting non-recurring gains and losses in each year during the plan's validity period shall not be lower than the average level of the most recent three fiscal years before the authorization date and shall not be negative On the other hand, each incentive object also needs to complete the corresponding performance goal, "the company has set KPI assessment indicators for each of them, and the options that cannot be reached are invalidated."
This is ZTE's new equity incentive measures six years later. As early as 2007, ZTE implemented the first phase of the equity incentive plan, which was also the largest incentive plan for A-share listed companies involving employees.
Feng Jianxiong said that compared with the incentive method with restricted stocks as the main content in 2007, the incentive plan was changed to the option form, and the size of the incentive object also dropped from more than 5000 people to 1531 people last time, "more focused" .
For ZTE ’s equity incentive plan, another notable detail is that its exercise of performance emphasizes the indicator of net profit, requiring an average annual net profit growth rate of 20%.
"Originally, there is profit with scale. Now this assumption is not established." Chen Jianzhou told reporters that although ZTE's operating principles have always emphasized the stability of scale, profit and cash flow, this principle needs to be changed at a time when the industry's competition situation has changed. There is a new interpretation.
Chen Jianzhou said, "Signing an order does not necessarily result in profit." Therefore, ZTE now pays more attention to the indicator of profit and strengthens the profit assessment of the business line.
The half-year report just released by ZTE also shows signs. In the first half of 2013, due to the declining revenues of GSM and UMTS products in the Chinese market, as well as domestic and foreign GSM mobile phones and data cards, ZTE's overall sales scale has declined, but at the same time, its overall product gross profit margin has been increased, gross profit margin Year-on-year and month-on-month increases.
"We have strengthened the control of expenses, and the expenses (sales, management and R & D expenses) during the period have dropped significantly compared with the same period of the previous year." ZTE Director General Feng Jianxiong told reporters.
Opportunities in the 4G window
Chen Jianzhou said that in addition to the retention factor after the huge loss, this equity incentive plan is also the company's supporting project for the second entrepreneurship in the face of 4G licensing and mobile Internet opportunities.
On July 12, Premier Li Keqiang chaired an executive meeting of the State Council to study deployment and promote information consumption, boost domestic effective demand, promote economic transformation and upgrading, and finally decided to issue 4G licenses during the year.
"ZTE is ready for 4G, waiting for the finalization of the national policy." Chen Jianzhou said that although the 4G market may face the challenge of price wars of various manufacturers, ZTE hopes to go further on the basis of maintaining the original share.
In addition, Chen Jianzhou also stated that ZTE is in the transition from CT to ICT. ZTE originally focused on the operator market, and is now focusing on extending this capability to the government and enterprise markets.
The revenue of ZTE's government-enterprise network business last year was about 10 billion yuan. It has successfully provided informatization solutions for many well-known enterprises and institutions such as Alibaba, China UnionPay, Tencent, PetroChina, and China FAW.
"Now many domestic enterprises rely on imported IT equipment, which is expensive. ZTE and other local manufacturers are technically mature, and it is possible to copy the practice in the telecommunications market to knock down the high profits of foreign companies, which greatly saves the company's investment." Chen Jianzhou said .
Chen Jianzhou further stated that, whether it is the 4G market or the government-enterprise network, as a technology-based ZTE, one of its most important resources is talent.
Based on this, ZTE will successively launch a series of talent incentive plans this year. Chen Jianzhou told reporters that in addition to the currently announced option incentive plan for directors, executives and core business personnel, ZTE has completed a salary increase for grassroots employees who have been employed for 3 years in June this year, and the growth rate is higher than that of Beishangguang. The average growth rate of per capita income in first-tier cities and other cities is "more than 8%."
In addition, at the moment of rising house prices, ZTE also has an Anju housing plan for employees. At present, it has completed the distribution of more than 2,000 anju housing in Shenzhen and is about to launch the third phase of the Anju housing plan in Nanjing and other places.
"In the third quarter and the end of this year, ZTE will also choose to launch a salary adjustment plan for key employees and all employees." Chen Jianzhou said.
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