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Shuanghui's execs battle investors for benefits

By Hao Yan (chinadaily.com.cn)
Updated: 2010-03-09 17:59

A dozen institutional investors defeated a proposal by the board of directors of Henan Shuanghui Investment & Development Co Ltd to waive the prior right of assignment, which enables the assignee to purchase shares of 10 companies at prices lower than the current market prices, National Business Daily reported Tuesday.

A Shenyin & Wanguo Securities research report said that when Shuanghui Development acts as an assignee, the executives enjoy only 16.37 percent of the total benefits. But the executives may get 31.82 percent if Rotary Vortex was the assignee, which needs Shuanghui's waiver.

Shuanghui's 101 staffers of executives and senior employees are indirectly holding 13.9 percent of its parent Shuanghui Group valued at 2.2 billion yuan ($322.3 million) as of Monday, or 20 million yuan each person.

Zhang Junjie, chairman of the board, earns an annual salary of half a million yuan but holds 312 million yuan worth of shares, 625 times his annual salary. Board member Mo Long indirectly holds shares valued at 729 million yuan. The other 99 staffers hold shares valued at1.2 billion yuan. They also received dividends for each share in 2007 and 2008, the paper reported

Institutional investors have been expecting the Shuanghui Group to inject the assets into the development company to bring higher profits, but that didn't happen.

Staffers at Shuanghui Development set up a complicated ownership structure, which was reported by the listed company on Dec 31, 2009, two years after these staffers founded their overseas company:

- In Oct 2007, 101 staffers at Shuanghui Group and 199 staffers in related companies set up a company, Rise Grand in Virgin Island. The staffers at Shuanghui Development hold 43.67 percent of Rise Grand.

- Rise Grand solely owns Heroic Zone, which holds 31.82 percent of Shuanghui International Holdings Ltd (also named as Shine C). Staffers hold 13.9 percent of Shuanghui International (Shine C).

- Shuanghui International solely owns Rotary Vortex, which wholly owns Shuanghui Group, and 21.19 percent of Shuanghui Development. The staffers hold 13.9 percent of Shuanghui Group, and 2.9 percent of Shuanghui Development.