Dongfang Shenghong’s Rare Employee Stock Ownership Plans and High Self-Raised Amounts

of 2021, the company’s total liabilities had reached a staggering 100 billion yuan. This aggressive expansion has raised concerns among investors and analysts about the company’s financial stability and ability to repay its debts.

The decline in profits and the uncertain market valuation of Dongfang Shenghong have further added to these concerns. The stock price of the company has been falling steadily, with the second and third phases of the employee stock ownership plan experiencing significant declines. This has raised questions about the effectiveness of the employee stock ownership plans and the potential risks faced by employees who have invested their savings in the company.

Despite these challenges, Dongfang Shenghong remains optimistic about its future prospects. The company has stated that its current asset and liability structure is reasonable and healthy, and it has strong financing capabilities and good cooperation with financial institutions. It believes that with the completion of its major projects and stable operation, the company’s cash flow will improve, providing a sufficient source of capital turnover for its production and operation.

The employee stock ownership plans introduced by Dongfang Shenghong are aimed at stimulating the enthusiasm of its core management personnel and new employees. However, the plans also come with strict conditions, including annual job assessments and the potential for share deductions if employees do not meet the required performance standards.

As Dongfang Shenghong continues its aggressive expansion under a mountain of debt, the company will need to carefully manage its financial situation and address the concerns of investors. The success of its employee stock ownership plans will depend on the company’s ability to improve its profitability and regain investor confidence in its future prospects.Dongfang Shenghong, a leading private petrochemical company, has made headlines with its frequent and large-scale employee stock ownership plans. In just 15 months, the company has launched three employee stock ownership plans, a rarity among A-share listed companies. What sets Dongfang Shenghong apart is the substantial average self-raised amount of its employee stock ownership plans.

The average self-raised amount for employees in the second, third, and fourth employee stock ownership plans was 551,000 yuan, 1.3189 million yuan, and 1.68 million yuan, respectively. If an employee participates in all three plans, the average payment amount would be 3.55 million yuan. This amount is significant, as it is enough to buy a 140-square-meter house in Suzhou, where Dongfang Shenghong is located. Comparatively, the salary of Pang Quanfang, the company’s supervisor and head of the audit and supervision department, in 2022 is 347,900 yuan, equivalent to her 10-year salary.

Wang Jun, the company’s secretary to the board of directors, has also shown great commitment to the employee stock ownership plans. Since joining Dongfang Shenghong in 2019, he has participated in all four employee stock ownership plans, contributing a total of 12.5 million yuan. In addition to putting all his salary for three and a half years into the plans, he has also paid approximately 8 million yuan out of his own pocket. Furthermore, in May of this year, Wang Jun participated in the executives’ holdings increase plan, increasing his holdings by about 8.8 million yuan.

Despite the employees’ dedication, the evaluation of Dongfang Shenghong in the secondary market has been declining. The stock prices during the completion of the second and third phases of the employee stock ownership plans were 16.78 yuan and 14.57 yuan per share, respectively. The current stock price is 11.30 yuan per share. The decline in profits and the company’s aggressive expansion under 100 billion debts may have affected the market’s valuation of Dongfang Shenghong.

Dongfang Shenghong has responded to these concerns, stating that the company’s asset and liability structure is reasonable and healthy. They have strong financing capabilities and good cooperation with financial institutions. With the company’s major projects in production and stable operation, they expect the cash flow of the company’s operating activities to improve, providing sufficient capital turnover for production and operation.

The employee stock ownership plans of Dongfang Shenghong have attracted attention due to their frequency and the significant amounts raised by employees. However, the declining stock prices raise questions about the market’s perception of the company’s prospects. The success of these plans will depend on the company’s ability to recover and generate returns for its employees.

What are the requirements for employees to participate in Dongfang Shenghong’s employee stock ownership plans?

Qinyan, Chairman of Dongfang Shenghong, believes that employee stock ownership plans are a way to inspire and motivate employees while also aligning their interests with the company’s. He stated that the plans are intended to reward employees for their long-term contributions to the company and create a sense of ownership and responsibility among employees.

According to Qinyan, the company has strict requirements for employees participating in the stock ownership plans. Only employees who have been with the company for a certain number of years and have made outstanding contributions to its development are eligible. Additionally, employees are required to meet annual job assessment standards, and their shares may be deducted if they fail to meet these standards.

Qinyan stressed that the employee stock ownership plans are a long-term incentive mechanism, and the success of the plans relies on the company’s ability to improve its profitability and regain investor confidence. He expressed confidence that with the completion of major projects and stable operations, the company’s cash flow will improve, providing sufficient capital turnover for production and operation.

Despite concerns about its financial stability and ability to repay debts, Dongfang Shenghong remains steadfast in its commitment to aggressive expansion and employee ownership. The company’s ambitious plans and substantial financial investment in employee stock ownership have set it apart in the market. Time will tell if these efforts will pay off and lead to a prosperous future for both the company and its employees.