Article/Opinion Leader Columnist Pi Haizhou
Dong Mingzhu encouraged employees to "smash pot and sell iron" to buy stocks, but could not buy her. This confidence came from the "benefit transmission" attribute of ESOP itself.
During the National Two Sessions this year, Gree Electric Appliance Dong Mingzhu, the chairman of the board of directors, said in an exclusive interview that she often encouraged employees to buy Gree shares. When there was a good opportunity to buy Gree shares, they would "smash the pot and sell the iron". If they could not buy Gree shares, they would come back to her. This topic immediately rushed to a hot search, causing many netizens to discuss.
As the chairman of Gree Electric, Dong Mingzhu encourages employees to buy shares of the company, which is very normal. However, it is not appropriate to encourage employees to "smash pot and sell iron". After all, employees should first solve the problem of eating. It is obviously not appropriate to sell the "pot" of food. However, despite this, Dong Mingzhu's feelings towards employees are understandable.
It should be said that Dong Mingzhu's above statement is actually not rigorous. Although I can understand the original meaning of Dong Mingzhu's words, it is still easy to mislead the market. For example, since Dong Mingzhu encourages employees to "smash pot and sell iron" to buy shares of Gree, can investors in the secondary market also "smash pot and sell iron" to buy shares of Gree? In fact, as an investor in the secondary market, he cannot listen to Dong Mingzhu's words and then "smash the pot and sell the iron" to buy shares of Gree Electric Appliances.
From Dong Mingzhu's above statement, it is obviously not rigorous. For example, if employees are encouraged to "smash pot and sell iron", they will buy it. If they can't buy it, they will come back to the secondary market. Does this mean that Dong Mingzhu will buy all the outstanding shares of Gree Electric? Obviously not. After all, Gree Electric currently has a market value of 200 billion yuan. It is impossible for Dong Mingzhu and employees of Gree Electric to buy both of them.
In my opinion, the reason why Dong Mingzhu encouraged employees to "smash the pot and sell iron" to buy stocks was that she could not buy them again. Here, the stocks that Dong Mingzhu refers to are the stocks of Gree Electric's employee stock ownership plan, not the tradable stocks on the secondary market. As for encouraging employees to "smash the pot and sell the iron" to buy stocks, there are also such expressions in the media. Dong Mingzhu said, I often encourage our employees to buy Gree stocks when they have money. Believe yourself. Dong Mingzhu said, "I told them that you should buy all the iron when you go home. This is a good opportunity for you. Later, I said that you can't buy it, and I'll come back to find out." From Dong Mingzhu's expression, "What a good opportunity, you can't buy it, and I'll come back to find out about it", which obviously refers to the company's employee stock ownership plan. In this way, Dong Mingzhu's words are not difficult to understand.
Speaking of employee stock ownership plan, Gree Appliance has indeed launched two employee stock ownership plans in the past two years. Among them, in June 2021, Gree Electric launched the first employee stock ownership plan. The share purchase price was 27.68 yuan per share. At that time, Dong Mingzhu planned to subscribe 30 million shares. On May 20, 2022, Gree Electric released the second employee stock ownership plan. The total number of employees to participate in the plan is no more than 12000, and the purchase price of shares is 16.36 yuan per share.
As far as the employee stock ownership plan is concerned, it is reasonable for Dong Mingzhu to mobilize employees to "smash pot and sell iron" to buy stocks. After all, the current ESOP in the market is a huge benefit for the company's employees. As far as the two employee stock ownership plans of Gree Electric are concerned, the employee stock purchase price is only about half of the market price at that time. For employees, the risk is very small. In particular, the second phase of Gree Electric's employee stock ownership plan was launched after the company's share price fell sharply. On this basis, it can be said that there is no risk to buy at half price. In this case, employees can really "smash the pot and sell the iron" to buy stocks. Those who buy stocks will make money. Those who do not buy stocks are fools. If we really meet such a fool, it is obviously a happy thing for Dong Mingzhu to "tell the truth".
And so it is. After a round of sharp decline, the stock price of Gree Electric reached the bottom at 28.49 yuan on October 31, 2022 (not below the price of the first phase of Gree Electric's employee stock ownership plan). Then the stock price of Gree Electric gradually rose, and now the stock price is around 37 yuan. The profit of the first employee stock ownership plan is more than 30%, and the profit of the second employee stock ownership plan is more than 120%, which is a turning point of doubling. Such returns are clearly beyond the reach of investors in the secondary market.
Therefore, Dong Mingzhu encouraged employees to "smash the pot and sell iron" to buy stocks, but could not buy her to cover up. This confidence came from the "benefit transmission" attribute of ESOP itself. Because at present, the employee stock ownership plan in the market has become a tool of benefit transmission. Some listed companies actively transfer benefits to their executives and employees. Dong Mingzhu also took advantage of this, so he had the courage to mobilize employees to "smash the pot and sell the iron" to buy stocks, and promised that if employees could not buy her, she would come to the bottom. This "benefit transmission" is not available to investors in the secondary market, so investors in the secondary market can only stare at Gree, and can't follow the steps of Gree's employees to "smash the pot and sell the iron" to buy shares in Gree.
(The author of this article introduces that a financial commentator, who has honed his unique vision and opinion on the stock market through 20 years of stock market training, has written the book "Easily speculate in stocks".)
