Shenzhen Expressway 'Restricted A-Share Incentive Scheme' Up For Vote Next Week, 'Yes' Vote Achieves 'Win-Win' for All Shareholders

HONG KONG, Nov 16, 2016 - (ACN Newswire) - The curtain has finally fallen on the U.S. Presidential Election. Donald J. Trump, the nominee of the Republican Party, emerged the winner and was elected as the 45th U.S. President, defeating at the finish line the elitist Democratic nominee Hillary Clinton, who had long been touted as the favorite. However, her vast experience in politics went all for naught and the 'billionaire for the grassroots' pulled off an amazing victory, which proved to be an upset more dramatic than event 'Brexit'.

Every Voter Matters, Every Vote Counts.

Consulting Institutions Always Play a Decisive Role in The Final Vote of An Election. Do They Really Understand How Chinese Corporations Are Run?

Not unlike a political election, proposals made by listed companies have to be voted on by shareholders. In years past, the number of HK-listed Chinese companies has been on the increase and they have become a force to be reckoned with on the HK market. However, institutional investors always keep a tight grip about the final say on the HK Stock Exchange. Proposals such as new shares issuance or incentive stock options are subject to HKEx rules and regulations. A 'motion' cannot be carried by A shareholders alone without the big 'aye' from two-thirds of H shareholders. This mighty high threshold has discouraged many mainland companies from listing in HK.

Unlike the A-share voting system, some institutional investors on the HK Stock Exchange entrust their voting rights to an independent body, while some make their voting decisions based on reports made by a third-party consulting firm. That's why the latter type reports more than likely make an impact on the final vote.

As we know, it is not unusual for proposals such as private placements and incentive stock options made by HK-listed Chinese companies to be vetoed on by H shareholders. Last year, the 'Employee stock ownership plan' of Haitong Securities (Stock Code: 6837.HK) was shelved because its H shareholders returned a mere 65.8% approval rate. As fate would have it, the 'Restricted A-share Incentive Scheme' formulated by Shenzhen Expressway Company Ltd., (Stock Code: 0548.HK) failed to win over two-thirds of its H shareholders at this year's shareholders' meeting in June.

Incentive Scheme as A Vehicle for Employee RetentionIncentive stock options are often granted to employees; linking up stock performance with management's core interests, they are aimed at creating a higher level of motivation and dedication... and ultimately more profits. Such an incentive scheme can also send positive signals to the market for the following reasons: 1) shareholders and management have ample confidence in the company's development and will present a united front with their connected participants (e.g. middle management and talented personnel); 2) management manifests its faith in achieving strategic targets over the near term (3-5 years) based on current satisfactory performance; 3) the company implements its business strategies through duly regulated management personnel and successful employee retention. All of these signals are indeed music to investors' ears.

Incentive stock options are also adopted by companies listed in China as a necessary means to retain employees and boost profits. Based on data released by the China Securities Regulatory Commission, since the publication of the 'Stock option encouragement scheme' in 2005, more and more listed companies have adopted the scheme. By the end of 2015, there were 808 listed companies that had launched 1,100 incentive schemes in total. In 2015, 151 listed A-share companies were using restricted shares, accounting for 74% of listed companies in China. Restricted shares have already become the first and principal instrument for incentive schemes among most mainland firms.

Shenzhen Expressway Reactivates Restricted A-share Incentive Scheme Undeterred by earlier setbacks, Shenzhen expressway had planned to reactivate its 'Restricted A-share Incentive Scheme' in September 2016. Apart from the reduced number of connected participants, this latest scheme remains largely the same as the version proposed in January. Meanwhile, the management of Shenzhen expressway has communicated with its shareholders in a proactive and extensive manner concerning the reactivation. The circular for H shareholders places more emphasis on connected participants' conflicts of interests, and explains how implementation of the scheme should establish a long-term incentive mechanism, which serves to mobilise management, motivate qualified employees and create linkages among the various interests of shareholders, the company and its employees. This will enable everyone to focus on the company's long-term development and effectively carry out its business strategies. As a matter of fact, it is generally expected in the market that the incentive scheme will be passed during the coming H shareholders' meeting.

The share prices of Shenzhen expressway have performed very well over the past year with solid, steady growth seen in the financial data over the past three quarters. The net profits to shareholders amounted to approximately RMB332 million, up 5.7% compared to the same period last year. Net profits for the company over the period January to September 2016, came to RMB947 million, up 11% over the same period last year. Tolls are a main source of revenue for the company. From January to September 2016, the company amassed RMB2.744 billion from tolls, up 25.4% over the same period last year. The stellar performance over the past three quarters has laid a solid foundation for meeting fiscal targets set out by Shenzhen expressway.

Shenzhen Expressway hopes all of its shareholders will vote 'yes' so that the company can further develop and achieve a 'win-win' scenario for all parties involved.

* Notes:1. Shareholders of Shenzhen expressway are encouraged to cast their votes; for details, please contact your stockbroker or stock agency. 2. Please click on the following link and learn more about Shenzhen expressway's (SHA: 600548; HKEx: 00548) latest announcement: (ANNOUNCEMENT IN RELATION TO THE RESTRICTED A SHARE INCENTIVE SCHEME) http://www.hkexnews.hk/listedco/listconews/SEHK/2016/1114/LTN20161114405.pdf