On the evening of August 16, China Evergrande disclosed its complete annual reports for 2021 and 2022. Compared with the financial report released in mid-July, the disclosed annual report is more complete, from which more details of Evergrande’s corporate governance in the past two years can be glimpsed.
It is worth noting that when listing the rights and interests of major shareholders, the 2022 annual report did not indicate the relationship between Ding Yumei, one of the shareholders, and Xu Jiayin, but only referred to as "Ding Yumei". Compared with Evergrande’s previous 2021 interim report, Ding Yumei, the main shareholder, was referred to as "Mrs. Xu" rather than "Ding Yumei", or "Professor Xu Jiayin’s spouse, Ms. Ding Yumei".
In addition, in 2022, Evergrande lost a total of 58,077 employees, with a total attrition rate of 36%; in 2021, it lost a total of 102,340 employees, with a total attrition rate of 46%. Xia Haijun, known as the "working emperor", also saw his salary shrink significantly in 2022.
At the same time, Evergrande announced that in order to allow creditors under the Evergrande Agreement Arrangement time to consider the proposed subscription and its impact on Evergrande Agreement Arrangement creditors, the company has decided to postpone and reconvene the Evergrande Agreement Arrangement Meeting, and at the same time postpone and reconvene the Jingcheng Agreement Arrangement Meeting and the Space-based Agreement Arrangement Meeting, in order to be consistent with the schedule of the postponed and reconvened Evergrande Agreement Arrangement Meeting. The Hong Kong Evergrande Class A Agreement Arrangement Meeting will be postponed to the afternoon of August 28, 2023.
Xu Jiayin, chairperson of the board of directors of China Evergrande, said in the 2022 annual report released on August 16 that in line with the principle of respecting the principles of international restructuring, justice and fairness to the existing rights and requirements of all creditors, the company and its advisory team continue to conduct in-depth and detailed consultations with overseas creditors, and carry out multiple rounds of communication on the details of the restructuring plan, and steadily advance the formulation of the overseas debt restructuring plan. "Looking to the future, the company will make every effort to ensure the steady and orderly progress of key work such as’Guaranteed Jiaojiao Building ‘, do a good job in the continuous operation of new energy vehicles, property services and other sectors, explore the efficient disposal and effective revitalization of the company’s core assets, and steadily promote risk mitigation."
Over 160,000 employees in two years
According to China Evergrande 2021-2022 Environmental, Social and Governance Report, as of December 31, 2022, Evergrande Group had a total of 10,2910 employees (including 4,506 employees of Evergrande Automobile and 72,076 employees of Evergrande Property), and the number of employees in the real estate development and construction system decreased by 36.9% compared with the end of 2021. Correspondingly, Evergrande’s total employee cost (including director’s remuneration) fell from 14.07 billion yuan in 2021 to 4.63 billion yuan.
In 2022, Evergrande lost a total of 58,077 employees, with a total attrition rate of 36%; in 2021, it lost a total of 102,340 employees, with a total attrition rate of 46%. Of the approximately 58,000 employees who lost last year, the general staff 54,900, with an attrition rate of 38%; the attrition rate of middle and senior managers was 19%; and the attrition rate of leadership was 10%.
At the same time, as of December 31, 2022, Evergrande Group recruited a total of 40,120 new employees, and its total new recruitment ratio was 39%. Among them, general employees recruited the most, about 39,300 people, accounting for about 44%.
It is worth noting that when listing the rights and interests of major shareholders, in the 2022 Evergrande annual report released this time, the relationship between Ding Yumei, one of the shareholders, and Xu Jiayin was not specified, and only "Ding Yumei" was called. Compared with Evergrande’s previous 2021 interim report, Ding Yumei, the main shareholder, was referred to as "Mrs. Xu" rather than "Ding Yumei" or "Ms. Ding Yumei, the spouse of Professor Xu Jiayin".
In addition, Xin Xin (BVI) Co., Ltd., the actual controller of Evergrande Group, was only noted in the 2022 annual report as "beneficially owned by Professor Xu Jiayin". Compared with the 2022 interim report, the statement is that "according to the Securities and Futures Ordinance, the interests of Xin Xin (BVI) Co., Ltd. in the company are also deemed to be held by Mrs. Xu".
Evergrande’s announcement on August 14 described Ms. Ding as a "third party independent of the company and its connected persons" and that she also held about 5.99 per cent of China Evergrande’s total outstanding shares.
"The announcement has made it clear that Ding Yumei is a third party independent of the company and related persons. If it is a spouse, the statement of the announcement should not be a third party independent of related persons, but the actual divorce should be subject to the civil affairs department."
Ding Yumei was publicly disclosed as Xu Jiayin’s spouse, most recently in late 2021. According to the reporter’s inquiry, the Hong Kong Stock Exchange disclosed that Xu Jiayin and his subsidiaries provided as security to people other than qualified lenders as a guarantee, which caused the nature of the share interest to change. The document shows that Xu Jiayin’s spouse information column is Ding Yumei.
Salary reduced from 200 million to 21.23 million
As of December 31, 2022, Hengda Group’s directors and top executives were paid a total of 79.952 million yuan, of which Xu Jiayin’s salary totaled 126,000 yuan, executive director and president Sean’s salary was 24.52 million yuan, and Xia Haijun, known as the "working emperor", was paid 2123.1 yuan.
However, in response to the annual salary of some executives at Evergrande exceeding 10 million yuan, Evergrande responded on August 17 that it was a misunderstanding.
Taking the salary of Xia Haijun, the former president of Evergrande Group, as an example, the annual report shows that his salary in 2022 is 21.23 million yuan, including salary 7,000 yuan, director’s robe gold 134,000 yuan and option income 21.08 million yuan (unredeemable). Evergrande responded that according to Hong Kong’s financial accounting rules, even if the option cannot be redeemed, it needs to be included in the salary according to the assessed value of the option when it is issued, so the salary shown in the annual report is not the real income of executives.
In terms of robe gold and salary alone, Xia Haijun’s salary last year was about 141,000 yuan. But in the 2021 annual report disclosed by Evergrande, Xia Haijun’s salary alone was as high as 149 million yuan, with a total salary of 202 million yuan. In 2020, Xia Haijun’s salary when he was the CEO of Evergrande was also 165 million yuan, with a total salary of 204 million yuan.
It is understood that since the second half of 2021, Hengda has started the work of streamlining, optimizing personnel and reducing salaries significantly, among which the headquarters departments have been streamlined from 31 to 11, the headquarters management staff has been streamlined from 2,176 to 617, and the monthly salary of the president and executive vice president has been reduced to 10,000 yuan.
The reason why Xia Haijun is called the "working emperor" is that his annual salary at Evergrande is as high as 200 million yuan. In 2017, Forbes released the "Hong Kong Listed Chinese Stock CEO Salary List", Xia Haijun topped the list with 270 million yuan, and Yu Liang’s annual salary on the list was 9.79 million yuan and Mo Bin’s annual salary was 6.058 million yuan.
According to public information, Xia Haijun was born in Harbin in 1964 and graduated from Central South University and Jinan University with a bachelor’s degree in metal materials, a master’s degree in business administration (MBA), and a doctorate in industrial economics.
In 2007, Xu Jiayin spent a lot of effort to recruit Xia Haijun, and has been Xu Jiayin’s right-hand man since then, becoming the vice chairperson of the board of directors and president of Evergrande. But in July last year, the relevant banks enforced the deposit pledge of about 13.40 billion yuan in Evergrande Property. Xia Haijun, Pan Darong and Ke Peng, the then chief executive of Evergrande Real Estate, were all asked to resign.
In February this year, Hengda Property 13.40 billion yuan independent investigation of the main results announced, after the investigation, the independent committee does not recommend the restoration of Xia Haijun and other three original positions.
Xia Haijun’s most recent public appearance was in June 2021, according to media reports published on Hengda Group’s official Weibo, when Hengda Group and China Petrochemical Group’s strategic cooperation signing ceremony was held in Beijing. Ling Yiqun, deputy general manager of Sinopec, and Xia Haijun, president of Hengda Group, signed a strategic cooperation agreement on behalf of both parties. Zhang Yuzhuo, chairperson of Sinopec, and Xu Jiayin, chairperson of Hengda Group, attended the event and witnessed the signing.