Wang Shi: I Would Resign Immediately If Yu Liang Becomes The Board Chairman

摘要: “Three head hunters approached me this morning through the phone,” Wang Shi said, telling the media that he didn’t have an annual salary of ten millions for nothing and that he had been fulfilling the responsibilities and duties as a board chairman. “But I don’t want to leave yet. Baoneng’s action is no doubt a hostile takeover. My personal honor no longer matters, what really matters is Vanke’s corporate culture.”

(Chinese Version)

The Vanke-Baoneng takeover battle might probably be the biggest conflict between the company founder and management team, secondary market and the capital ever in history. The initial takeover battle between Vanke and Baoneng at this point has evolved to a war among Vanke, Wang Shi and the management team he represents, Baoneng, and China Resources, which makes this incident a very great case study for entrepreneurs and the entire capital market.

This dispute erupted in late 2015 as Baoneng continuously raised its stake in Vanke and eventually became Vanke’s biggest shareholder. The management team of Vanke, including Wang Shi, protested against the increase strongly due to the unknown source of funds, which was mostly insurance funds, that Baoneng used to increase its stake. Wang Shi even commented that Baoneng did not qualify to be the largest shareholder, a speech which brought up a great stir among the investors and the public.

In response to the takeover, Vanke then immediately initiated stock suspension and injected itself with investment from Shenzhen Metro, making the metro group the largest shareholder, which also led to the credibility crisis for China Resources. Subsequently, China Resources voted against the restructure of Shenzhen Metro Group.

On June 26th, Baoneng gave out the final blow: the company demanded Vanke to fired the core management team of Vanke, which includes Wangshi, as well as 12 directors and supervisors. It seems that Baoneng is teaming up with China Resources against Vanke in this battle.

On the board meeting on June 27th in the afternoon, Wang Shi seemed to have calmed down and reflected on his mistakes in dealing with this incident, especially his arrogant comment that accused Baoneng of hostile takeover. “I didn’t have a good attitude, if I were really to say what I have done wrong,” Wang Shi stated.

Wang Shi also stated that Vanke had been making compromises all along but still enough is enough. “I don’t think the largest shareholder can do anything in the company. I believe in the power of supervision,” Wang Shi said, answering the questions on the conflicts in the capital asked by the investors. What’s more, Wang Shi agreed that if Yu Liang could be the next chairman of the board he would be willing to resign.

What follows is the Q&A of the Vanke board meeting on June 27th in the afternoon, edited by TMTpost:

Shareholder: It seems that chairman Wang Shi is no longer in control of his fate in the company despite the fact that he really wants to stay with Vanke

Wang Shi: 

Three head hunters approached me this morning through the phone. Under these circumstances, it’s hard to keep the management team of Vanke stable. But I assure you that we will do our part well. I am one of the founders of this company and the corporate culture of Vanke connects me. We are the guardians of Vanke’s culture.

Some people say that the company can sacrifice me, but the price would be the interest of mid and small shareholders. I don’t want to damage those shareholders, or Vanke’s proprietor, partners, or Vanke’s brand image. In this current state, I can make my own choice. I hope that Yu Liang can replace me if I were to be removed from my post. If Yu Liang could be the board chairman, I would resign.

Vanke finished the demutualization process in 1988. I didn't take any share at that time because I had faith in the country, the market, our race, and the future. It was optimism. We represent Vanke’s culture, and our personal honor no longer matters. Optimists shouldn't be pessimistic.

Before the end of the demutualization process in 1988, I only had a regular salary. Even after the demutualization process I still had a regular salary. I was in control of the company’s developmental direction and strategies and I directed the internationalization process of Vanke. I participated in the negotiation of Vanke’s projects in San Francisco and London. Other conditions will be better explained by the chairman of the supervision department.

Chairman of Vanke’s supervision department, Xie Dong:

First of all, what makes a qualified board chairman? A person that goes to work every day and pays attention to everything around him? Or is it a person that’s calmed and decisive, but also allows staff he trusts to make their own decision? In my opinion, a qualified board chairman must manage the major issues well. What are major issues? The making of strategies, team building, and talent searching etc., all these things are major issues that should be taken seriously in a company.

Our shareholders and the market must have had an idea of Vanke’s position in the market in terms of the company’s strategy, team, and performance. Vanke might not be the best company in the industry, but still it’s a leading one. In my opinion, Chairman Wang Shi is a qualified board chairman. At least he’s not so bad that he has to be removed by the board meeting.

Secondly, I want to make it clear that Chairman Wang Shi has never left his post and has always been dedicated to strategies for the company’s development and pushing the internationalization of Vanke forward.

Around 2010, Vanke and the real estate industry both entered the crucial phase of transformation. Wang Shi’s overseas study tour provided Vanke a more global outlook and also helped the company accumulate many international resources and collaborative partners, which has proven to be incredibly crucial for the company’s internationalization strategies in the past few years.

Thirdly, Wang Shi is an executive. Just like the other two executives, Wang Shi has never had any bonus from the company. He only has a regular salary like the rest of the management team at the company, a salary that’s approved by the board meeting and the company’s commission and is being mentioned in the fiscal report every year.

In 1998, Vanke’s sales income was only ¥2 billion and in 2010 the number soared to 100 billion. In 2015, Vanke’s sales income hit ¥200 billion and the company achieved a revenue of ¥18.1 billion, a 116 times growth in the past 18 years. However, Wang Shi’s salary did not go up as the sales performance improved. Instead, it’s lowered. In 2015, Wang Shi’s salary is only 0.05% of the company’s revenue.

A shareholder mentioned the book My Success Is That People No Longer Need Me. Wang Shi said that at present he doesn’t consider himself as successful. He wants Yu Liang to replace him and resign from the company instead of being removed.

“I didn't use the word barbaric to describe Baoneng. I only said hostile takeover,” Wang Shi once again made his explanation when asked about his rude comments on Baoneng previously, saying that hostile takeover and barbaric are two different words and that people shouldn't make something out of a neutral word in the financial world.

Yu Liang’s response on the matter of shareholder and the staff:

Consumers always come first while shareholders and the staff come second.

We invented a very important mechanism, which combines professional managers and shareholders, meaning that we are both shareholders as well as the managers. We make these two identities into one. In this way, our core interest will be the same when pursuing to achieve profit. Therefore, the matter of the shareholders and the staff is solved. So we can say that consumers always come first in our opinion while the staff and shareholders come second.

On whether to create a new Vanke:

About the removal, we won’t get further information on that matter until Friday. If there’s already a decision then none of these will make sense. If that time really comes we might consider making another Vanke. But so far we are still fulfilling our duties. We have heavy weight on our shoulders and there’s no spare time for us to do anything else. In the future I might consider it.

A shareholder who has been with the company for a long time had expressed his disappointment towards the board. “It’s been a long time since the last time people would payso much attention to the meeting. In the past most people would just focused on their phones or something. I am indeed touched by this,” Wang Shi said with a smile. Another shareholder asked Wang Shi to have a conversation with China Resources. Some even suggested to protest against the major shareholders in a legal way. However, Wang Shi refused to do so politely in the end.

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[The article is published and edited with authorization from the author @TMTpost, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.

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