The solution of the Gome War: the highest principle of shareholder's benefit

Wen/Chen Xiaofeng Huang Guangyu created a Big Mac enterprise-Gome, created great value for society and shareholders, but also because of the contempt for legal risk management, but also because of its own exposure to legal risk to the United States once in a precarious situation, Mr. Chen was tasked with "the occasion of crisis", Let Gome smooth development to today, for the interests of Gome shareholders to contribute, also can be said to be.　　"Chenhuang" The development of the present, the media and the public, in addition to stand on different points of view, the attention to the development of today who wins who negative "spectator saliva war." However, because did not find a standard can be balanced, resulting in Chenhuang two people said that the public is reasonable, the woman said, the public is also a matter of opinion, without seeking a solution, the end of the event seems to eventually become an elusive gamble.　　At present, both sides claim to win the support of most shareholders, but what is the basis of shareholder vote? According to the basic principles of corporate governance, shareholders ' interests are the best interests of the company, and the shareholders ' meeting is the highest authority of the company, and the board of Directors is the governing body of the company to exercise power on behalf of shareholders under the authorization of the general meeting.　　It is clear that in the "Chenhuang", whether it is in line with the best interests of shareholders is the only law to clarify and solve problems, and also the highest standard.　　Based on this, we can from the following several aspects to analyze whether the relevant events or actions are in line with the highest principles of shareholder interests, may be able to finally obtain a clear solution.　　Is the company's strategic adjustment in line with shareholders ' interests? According to media reports, Wong Kwong Yu and Chen's contradictions intensified one of the fuse, is the two sides on the development strategy of the gome adjustment, Huang Guangyu, Chen changed Gome has always adhered to the strategic development direction ——— in the premise of increasing market share, through management to continue to enhance enterprise efficiency. The media also pointed out that Chen Xiao at the expense of enterprise market share, to simply and massively close the average store below the method, through the "performance" to whitewash the Gome statement, to achieve within the United States and the market to expand personal impact, as well as the impact of investors, and to "the scale of Suning is originally only about 60% of Gome, is now being fully transcended "as corroboration. And that year, Huang Guangyu when the Gome, has set an iron gauge and the bottom line, must remain on suning 1/3 leading, once the development scale of suning appliances to 90% of Gome, that for Gome will be a very dangerous thing.　　Now Gome is fully overtaken by suning, of course, let Huang Guangyu feel like Awn in the back. Should "scale one" be in the best interests of shareholders? Or is "profit first" in the best interests of shareholders?　　This is actually one of the focuses of the "Chenhuang" debate. Professional analysts in the industry believe that Chen Xiao as the representative of the management to implement the "profit first strategy", the most realistic consideration is short-term interests, Chen Xiao's short-term behavior is a listed company's unique incentive mechanism and even human nature, not related to personal morality. Because the usual small shareholders, also including foreign agencies, do not care about the company's longFar-away interests, they are just investors, just like "pig", pigs are used to kill the future of the money, who can be in the short term pig well, who is popular with the general shareholders. and "Raising a son" is not the same, "a year of pigs, Bainianshuren." "The relevant professionals also analyzed that if an industry market is very small, far from the average level of foreign markets, or the industry's low concentration, or the industry concentration is high, but the leader's advantage is not obvious." So the "scale first" is inevitable, of course, this is not to give up the profit requirement, but for the current Gome, the profit is not so important, market share is the most important.　　Therefore, the conclusion is: Gome's only successful model must be "scale first" strategy.　　But Chen Xiao said that the direction of choice is to do subtraction, is the hope that through the refinement of management continue to improve enterprise efficiency. Actually, we can put aside the two sides on the strategic direction of adjustment issues not to discuss, but to discuss another problem: it is a company's strategic direction of adjustment, is a company's most fundamental interests, can determine the fate of the entire company changes, is involved in the interests of all shareholders of the company's major issues. For such a major issue, if under the domestic company law, must be through the shareholders (large) will be able to determine the right to change. Does the management, represented by Mr. Chen, have the right to vote on important matters so relevant to the interests of Gome and all its shareholders? Should it be submitted to the company's provisional shareholders ' meeting to reflect the will of Gome shareholders?　　To be more in line with the interests of Gome shareholders?　　is the "kidnapping" board in the interests of shareholders? June 6, 2009, Gome convened a board of directors, unanimously passed the Bain Capital injection of Gome's plan. Under the agreement, Bain Capital and gome existing shareholders have the power to subscribe to the new 18% of the equity, known as "share", while Bain Capital to subscribe to Gome's 4.6 billion Hong Kong dollar convertible bonds 12%, the annual interest rate of 5%.　　A total of HK $3.2 billion was financed. According to the media, signed the agreement and listen to the views of major shareholder Huang Guangyu, and signed the "extremely harsh binding provisions." The provision includes 2 of the 3 executive directors of the Jobern Capital, which will buy back 2.4 billion yuan of convertible bonds at 1.5 times times the cost of gome; If Mr. Chen leaves the United States will lift the loan guarantee, and gome as long as the bank appears 100 million yuan non-performing loans, Bain can get 2.4 billion yuan.　　And these provisions put gome into a great risk. We cannot look into the difficulty of Chen's talk about financing in Gome's thirst for money, also can not find Chen and Bain signed the agreement when there is media suspicion of "fishy son", but, at least one thing is to be sure, and Bain's agreement to "entrainment" of the "harsh terms" in fact kidnapped Gome's board of Directors, If Gome or shareholders default, it will bear huge compensation. In particular, Chen also "kidnapped" his interests in the agreement, because the agreement is clearThe agreement "if Chen's departure will lift the Gome loan guarantee, and gome as long as the bank appeared 100 million Yuan non-performing loans, Bain can get 2.4 billion yuan", it is clear that this agreement signed in the important interests of Chen Xiao, do not know Chen's board "unanimously passed" when Chen Xiao has evaded?　　This avoidance should be required by the law of Regulation. According to the basic principles of corporate governance, the board of Directors is a shareholder (large) election, the shareholder is through the election of directors to manage the company's way to reflect their own will, and then realize their own interests. And Bain's agreement to set up the "kidnapping" of the board of Directors, in fact, is to deprive shareholders through election directors to reflect their will, is not a disguised infringement of the interests of shareholders suspected? May I ask whether the agreement on the "kidnapping clause", which deprives shareholders of the right to elect directors in such a significant disguised form, should also be handed over to the provisional shareholders (large) to reflect the will of the shareholders of Gome?　　To be more in line with the interests of Gome shareholders?　　is the financial data of China in accordance with the shareholders ' interests? In the battle for Gome's control, Mr Huang's biggest criticism of Mr Chen's class was "the poor performance of Mr. Chen's leading gome".　　As a result, the medium-term results directly determine whether Mr. Chen can prove himself and the current Gome management ability in front of shareholders and the public. Sure enough, gome interim results Conference in Hong Kong, Guangzhou, Shanghai and Beijing Four Grand held, semi-annual report, Gome's first half income 24.873 billion yuan, an increase of 21.55%, the company net profit of 962 million yuan, an increase of 65.86%.　　Chen said that as of the end of June this year, the operation of Gome has reached the best level since the 2008 crisis, and said that this is the entire staff along the board set up the company's correct direction of development efforts. For the above performance, Gome major shareholder Huang Guangyu has another interpretation, repeatedly stressed, "Today's gome has been lagging behind a lot of", through the 2008-2010, Gome listed part, unlisted part, large and medium-sized electrical appliances and the competitor Suning performance data comparison, that: Sales of major competitors Rose 31.9% in the first half of 2010 compared with the same period in 2009, while Gome was only 21.6%. Gome did not maintain the necessary growth rate as the market volume grew. Gome's board of directors publicly indicated that the current funds are relatively abundant, indicating that gome is lagging behind the growth is not a financial factor. By the end of 2008, the number of Gome flagship stores, standard stores and 3C specialty stores were: 76, 739 and 44, and by the end of the second quarter of 2010, the figure was: 79, 637 and 24. Huang Yu, the United States, the number of stores, professional shops continue to decline, so that the yellow family puzzled is: "Gome is the pioneer of the development of the two-tier market, but after more than a year of heavy closing, now in these two-tier market, the first advantage has been lost." "Think" because the company's main executives deviated from the company in 2008The development of strategic planning, Gome is about to lose in the market share of the leading edge in profitability, operational capabilities have fallen, and lagged behind peers. The board and management should face the gap rather than avoid it. "Horizontal as ridge side into the peak." Huang Chen The performance of both sides of the interpretation of more from different angles.　　Gome management emphasizes the growth and sustainability of performance, focusing on current interests, while Mr Huang emphasizes market share and industry position, focusing on long-term strategic interests. So, is that interpretation more consistent with the interests of shareholders? Maybe different shareholders have different ideas and expectations.　　For shareholders who are based on long-term strategic interests, such as Mr Huang, of course they are concerned about the long-term strategic interests of gome, and for some small and medium shareholders, many are hoping that the current performance is better, and can sell money when the stock price is high, not too much of the long-term interests of gome.　　It is also one of the focuses of Chenhuang that whether the equity incentive accords with the shareholder's best interests and the implementation of the equity incentive scheme. In July 2009, the Gome Board of directors, represented by Chen Xiao, announced an equity incentive plan, covering the general manager of the branch, the general manager of the region and the headquarters of the Central Director, Deputy director of the above level, a total of 105 people. The incentive scheme has a total value of nearly HK $730 million. Of the 383 million shares, 11 senior executives such as Chen have been given 125.5 million shares and the remainder will be allocated to other managers. Chen Xiao, who is the chairman and president of Gome's board of directors, has won 22 million shares in the incentive scheme, while the other 4 executive Directors Wang Junzhou, Wei Qiuli, Sun Yiding and Wu Jianhua have received their subscription rights for 20 million, 18 million, 13 million and 10 million shares respectively.　　To date, China's home appliance industry share incentive. It doesn't make sense to specifically discuss whether equity incentives should be implemented, because the equity incentive plan is Gome's major shareholder Huang Guangyu "presided over" during the general meeting of shareholders passed, it is the efforts of Huang Guangyu has the huge equity incentive plan, so cannot say that Huang Guangyu does not agree with the equity incentive plan. But the crux of the problem is that the "Chenhuang" are divided over the timing of the equity incentive plan. [Page] Insiders think: "In fact, this is Chen's most ruthless trick, that is, the United States in preparation for many years but always unwilling to implement the ' Executive Stock option Incentive Scheme ' to really implement. In the face of great economic interests, Chen has formed a alliance with other board members and management.　　Perhaps this has also been the voice of Mr Huang. So is the equity incentive plan in the best interests of shareholders? Obviously, if from the Gome development strategy and Gome senior management team stability angle, the equity incentive plan implementation is in line with shareholder's benefit, but the question is how to implement?　　What procedures should be passed to best meet the interests of shareholders and perhaps the most important? Mr Huang, a major shareholder in Gome, is behind bars, leading the board toMr Chen is "in control", and the implementation of all equity incentive schemes involves nearly all the significant interests of board members such as Chen Xiao, Wang Junzhou, Wei Qiuli, Sun Yiding and Wu Jianhua (the 3 non-executive directors of Bain, of course, are in favour), and it can be said that　　Mr. Chen's Board of directors decided that matters related to the vital interests of all executive directors, some "related transactions" suspicion, should be avoided. Although, Gome's board has been authorized to decide on any opportunity to implement an equity incentive plan, but at this time the board is not at that time of the board, because the shareholders can represent the interests of the major shareholders of Huang Guangyu "absent" and Chen's control of the board is representative of their own (at this time Chen Xiao may not　　Because it is impossible to reflect the will of the shareholders to vote on matters of their own great interests, and in such a "go yellow" sensitive period to vote on this matter. Only the greatest degree of shareholder's will can represent the interests of shareholders.　　As for the equity incentive scheme, Chen Xiao can completely let the independent Executive Director on behalf of the interests of small shareholders to vote (all the directors of the Executive Director to avoid), or to the provisional General Assembly vote, which is the most representative of the will and interests of Gome shareholders, is the most legitimate and reasonable.　　It can be foreseen that if Chen is so, he must not be able to oppose the public opinion will not be so unfavorable to Chen. Whether the "countries marching" battle is in the best interests of shareholders the Gome board of directors, led by Mr. Chen, and the Life-and-death struggle of Gome's major shareholder, Huang Guangyu, is undoubtedly the only one to be harmed by Gome and Gome shareholders, and of course, Huang Guangyu, the biggest shareholder, is of course the victim Presumably, the people who are hurt may also have the simple feelings of the general public.　　If we continue to fight, the further injury is gome and all shareholders. "Kill Chen, retain the management team, Gome worry-free." If you kill Chen Xiao, keep the management team, Gome dangerous. "A company that has been watching Gome is so worried. Yes, despite the moral support of the Huang Sisters, Gome is faced with a continuing problem, not a loss after a battle victory. These are the questions that should be worthy of the family thinking of Huang. Of course, some professionals say, "There can only be one Wong Kwong Yu in the world, but there are countless Chen Xiao!"　　"Perhaps, Huang Guangyu family has taken into account that Chen is not the only gome, after all, the professional manager market has formed, Chen Xiao, may not be able to take away all the management team." Yes, Chen can take advantage of the general mandate of the Board of Directors of Huang Guangyu, exercise 20% of the additional, diluted Mr Huang's shares, and can firmly control the management of Gome, but, Chen Xiao can get what? Is that a lot of options? Or is it possible to have the pleasure of continuing to control Gome's power? Although Chen said it represents the interests of small and medium-sized shareholders, some have questioned: "If the interests of major shareholders have been abandoned, how to speak for small and mediumShareholder benefits? "At that time, Gome's future is still worrying, Gome shareholders ' interests remain difficult to be guaranteed and realized." Moreover, even if Mr Chen wins, Mr Huang will take back the 300 stores he owns that are not listed, and take back the Gome brand, what about Gome's future and Gome's shareholders ' interests?　　More importantly, even if Chen's actions are not illegal, how can he face the public opinion and moral accusations?　　Although, Chen said: "Fish dead net may not be broken", but so the future fate of Gome and the interests of shareholders as a gambling of a battle, I believe it must be against the best interests of all shareholders. Sang, Yuwengdeli. Perhaps the only smile is Gome's biggest competitor-Su ning.　　And once Su Ning to surpass Gome to become the most powerful electrical store enterprises, may gome will become a second-rate or triple-flow enterprises, when all the disputed parties will be quiet, because the disputed gome may have become less valuable. Solution: Each step back, the sky based on all of Gome should be the highest principle of all shareholder interests, therefore, "Chenhuang" both sides should give up the current fierce fighting, each step back, to reach a compromise, perhaps the best way to solve the problem. To synthesize various factors, it is suggested that the following proposals should be considered: method One: Since it is a compromise, Chen Xiao can start from the overall situation, abandon the position of Chairman of the Board, remain in the Executive Board, and the Chairman of the Board and the relevant board members shall be elected by the provisional shareholders ' meeting So, can not touch the "binding harsh clause", Gome does not have to pay 2.4 billion yuan huge compensation, the company can operate smoothly. At the same time, the company's development strategy planning, Equity incentive plan and 20% additional general authorization, and so on, by the provisional shareholders ' meeting to determine the vote.　　In addition, the competence of the Board of Directors shall be further clarified and agreed by the provisional shareholders ' meeting. Method Two: The second, Wong Kwong Yu continue to let a step, Chen continued to remain in the Chairman of the Board, the relevant board members by the Provisional General Assembly election reorganization, Huang Guangyu family because it is Gome's largest shareholder, can be selected under the board of Directors to exercise the corresponding powers. For the company's development strategy planning, Equity incentive plan and 20% additional general authorization, and so on, by the provisional shareholders ' meeting to determine the vote. At the same time, strengthen the corporate governance institutions, increase the number of independent non-executive directors, strengthen the relevant professional committees (such as decision-making, nomination, remuneration, risk, audit committee, etc.) functions, outside the Director-elect relevant professional Committee director.　　In addition, the competence of the Board of Directors shall be further agreed by the provisional General Meeting, clarifying the rules of procedure of the Board of Directors, and implementing the avoidance system for voting on important matters closely related to the interests of executive directors. In summary, only in line with the best interests of shareholders, is the only correct way to solve. At the same time, due to the outbreak of today's "Chenhuang dispute" is the company's legal risk management deficiencies and the inevitable manifestation of the outbreak, therefore, "Chenhuang" after the curtain, strengthen the identification, evaluation, preventionFan and management of legal risks will be the future of gome is a very important priority. Because only in this way, gome can achieve long-term and stable development.