But this is only the first step taken by Dong Mingzhu on the road to re-election. His fate is ultimately in the hands of small and medium shareholders represented by institutional investors. Institutional investors who have played with Dong Mingzhu for two sessions of the Board of Directors will have a high degree of attention in how they will choose in the shareholders' meeting.
Dong Mingzhu was nominated for director candidate
In terms of director candidates, Gree Group, the largest shareholder, recommended Dong Mingzhu, Huang Hui, Wang Jingdong, and Zhang Wei to participate in the election. The second largest share of the Tokyo Sea guarantee recommended Zhang Junduo and Guo Shuzhan to run for election. At the same time, the board recommended Liu Weiwei, Xing Ziwen, Wang XiaoHuaweiCandidate for independent director.
Compared with the current board of directors of Gree Electric, Dong Mingzhu and Huang Hui recommended by Gree Group are two old faces. Among the new faces, Wang Jingdong, who is the vice president, secretary-general and financial controller of Gree Electric Appliances, is also familiar with everyone. Zhang Wei has also served as Gree Electric Appliance for a long time and is now the executive vice president of Gree Group.
Among them, Dong Mingzhu is the most concerned. In October 2016, the Zhuhai State-owned Assets Supervision and Administration Commission had waived the chairmanship of Dong Mingzhu Gree Group. At that time, the outside world believed that this change made it difficult for Dong Mingzhu to influence the candidate for Gree Electric's directors in the Gree Group, and cast a shadow over his re-election as chairman.
In August 2017, Huang Hui, executive vice president and chief engineer of Gree Electric Appliances, became the executive president of Gree Electric Appliances, second only to Dong Mingzhu, who is the chairman and president of Gree Electric. This is once again reminiscent of the market as a successor for Dong Mingzhu.
In 2018, at the crucial moment of the reelection of Gree Electric's board of directors, Dong Mingzhu still used the performance to "save" himself. Since 2018, driven by the annual revenue target of 200 billion yuan, Gree's performance has shown strong growth, and Dong Mingzhu's re-election has turned.
After the expiration of the term of the board of directors on May 31, 2018, Gree Electric announced on the evening of June 4 that the election will be postponed appropriately. The 12 proposals reviewed at the shareholders' meeting on June 25 did not include the reelection of the board of directors and the board of supervisors.
At the general meeting of shareholders on June 25, Dong Mingzhu, 64, also responded to the question of whether to retire, saying that “from the heart, I want to retire.” When attending the Gree 2018 re-launch ceremony, Dong Mingzhu said "I think I am still very young today. Although I am over 60 years old, my heart is still like 25 years old."
Can Dong Mingzhu be re-elected as chairman? This 2018 unsolved mystery will be unveiled at the shareholders' meeting half a month later and on the board that will be held later. From the current point of view, Dong Mingzhu's nomination for the director candidate of the first major shareholder Gree Group is undoubtedly the first step to success.
Liu Weiwei participates in independent director or "assisted" Dong Mingzhu
Insiders pointed out that if Dong Mingzhu was able to be elected as a director at the shareholders' meeting after half a month, then the election of the chairman on the subsequent board is almost a nail. In particular, Dong Mingzhu’s “friends” Liu Weiwei also participated in the independent director. If elected, Dong Mingzhu will receive an important vote.
Public reports show that as early as 2015, Dong Mingzhu and Liu Weiwei appeared at the same time. At that time, Liu Weiwei, who was attracted by the market due to the bombardment of LeTV, appeared at the Gree New Product Launch Conference in September and said: "We must discuss with General Manager Dong to promote the cooperation between Gree and the Aerospace Science and Technology Group."
Since then, Liu Weiwei has become a staunch supporter of Dong Mingzhu. In 2016, when Dong Mingzhu invested in Zhuhai Yinlong in his own name, Liu Weiwei praised “Dong Mingzhu’s investment in Zhuhai Yinlong has undergone tremendous changes. There are both technology and a world-class entrepreneur. I believe that Yinlong will be The second Gree."
When Dong Mingzhu satirized the US's tens of billions of acquisitions in a forum in March 2017, Liu Weiwei also criticized this as a very bad acquisition, saying that "people would think that Chinese companies have money and cause great difficulties for other companies." But let Dong Mingzhu and Liu Weiwei truly establish a "revolutionary friendship", but also thanks to Bao Neng.
In the early morning of April 8, 2018, Liu Weiwei published the article "Bao Neng's "Color Revolution" in the personal WeChat public account, accusing Bao of robbing the shares of CSG, Vanke and Gree with money from the empty gloves and white wolves. On the next day at the Boao Asian Financial Forum, when talking about Baoneng, Dong Mingzhu said frankly: "Bao can hurt Gree."
On May 15, 2018, Liu Weiwei said in the WeChat circle of friends: "Flying to Zhuhai, and my girlfriend, Dong Mingzhu, Chairman of Gree Electric Appliances!" On May 17, Liu Weiwei once again appeared in the WeChat circle of friends. In the evening, take photos of the Gree 2018 re-launch party.
Destiny is in the hands of institutional investors
Whether Dong Mingzhu can be re-elected as chairman, the results will be announced at the Gree Electric Appliances General Meeting held at 14:30 on January 16th. The votes of small and medium shareholders will determine the fate of Dong Mingzhu.
Gree Electric has always been recognized as a super white horse stock due to its steady growth in performance and large annual dividends. It has won the blessing of many institutional investors, thus forming a very perfect corporate governance structure. Then, for Gree Electric, how powerful is the vote for small and medium shareholders represented by institutional investors?
In 2012, the Gree Electric Board of Directors was elected, and the candidate recommended by Yale University Foundation and Penghua Fund, Feng Jiyong, won 113.66% of the total voting rights and was successfully elected as a director. Zhou Shaoqiang, recommended by Gree Electric Appliances, only won 36.6% of the total voting rights and was unsuccessful.
On June 7 of the same year, Guo Shuqing, then chairman of the China Securities Regulatory Commission, said at the ceremony: "At the Gree Electric Appliances Shareholders' Meeting, a director of a foreign qualified institutional investor, Yale University Foundation and Penghua Fund, was elected, and the market is improving this. Enterprise corporate governance is expected. As more and more investment institutions participate in corporate governance, it will definitely affect the decision-making mechanism of listed companies."
It was also at that general meeting of shareholders that Dong Mingzhu was successfully elected as a director and was elected as the chairman of the board of directors. Gree Electric also entered the “Dong Mingzhu era” from the “Zhu Jianghong era”. Since then, the protagonist of the game around Gree Electric has been replaced by Dong Mingzhu and institutional investors.
Dong Mingzhu rewards institutional investors with cash dividends. In 2013, Gree Electric's dividend payout ratio reached 40.4%, compared with 32.04% in the previous five years. In 2014, Gree's dividend payment rate increased to 63.31%, and in 2015 it further increased to 71.48%. In 2016, Gree Electric also distributed a super red envelope of 10.828 billion yuan.
However, in the acquisition of Zhuhai Yinlong, institutional investors did not “return” Dong Mingzhu.
On October 28, 2016, Gree Electric held a general meeting of shareholders to vote on the acquisition of shares to acquire 100% equity of Zhuhai Yinlong and raise funds of 9.7 billion yuan. In order to win enough votes in favor, Gree's management has repeatedly said dividends in communication with institutional investors, but institutional investors still use this to make this potential acquisition.
At the general meeting of the day, I didn’t know whether it was a whim or a deliberate attempt. Dong Mingzhu didn’t get applause when he entered the door: “Gree didn’t treat you badly! I can’t say this at all. You look at the listed company. Which ones give you dividends? I won’t pay you dividends for 5 years. How can you treat me?”
As a result, Dong Mingzhu said “to do it” – after the announcement of the 2017 annual report, Gree Electric did not pay dividends. Prior to this, many institutional investors had thought that in order to ensure the smooth re-election of the chairman, Dong Mingzhu did not dare to "offend" institutional investors, not only will continue to pay dividends, but also an unprecedented proportion of dividends.
Since then, the board of directors of Gree Electric has been postponed, and Gree Electric has also made a mid-term dividend after the release of the mid-term report in 2018. Institutional investors who were “learned” once in this game, how would they choose at the shareholders’ meeting on January 16th?