Chapter 376 Zhu Min's Price Cut and the Good News of "Passing the Meeting"
After Zheng Yingjie signed the confidentiality agreement, the curious Li Xiaofan asked him for advice on some GIC company management issues.
"Mr. Zheng, I'm very curious. The board of directors of your GIC company is almost entirely composed of senior leaders of the Singapore government. It's a bit like a government agency, but all of your participation is market-oriented activities. How does it work here? "
Zheng Yingjie smiled and said: "Although our company was established by the Ministry of Finance of Singapore, GIC is registered in a private name and is legally an enterprise, not a government agency or manager of the public sector. Although the Ministry of Finance holds GIC's 100 % equity, but the Ministry of Finance is only responsible for supervising the operation of GIC, but does not interfere with the company’s specific operations and the separation of ownership and management rights..."
Li Xiaofan then asked a core question:
"Mr. Zheng, elites like you all graduated from prestigious schools in Singapore or overseas, and have rich working experience in multinational companies. How does GIC retain you? What attractive incentive mechanism is there?"
"Director Li, you are on to something! The Singapore government's policy of high salaries for civil servants is well-known around the world. The concept promoted by Mr. Li when implementing it is: people work based on incentives! This is a very important concept, which is both in line with theoretical principles and It has been confirmed by the economic and social life of mankind for thousands of years, so this concept of Li Zizheng is also implemented in our GIC company!”
Zheng Yingjie continued to explain:
"GIC has internally established a set of scientific methods to set asset return benchmarks to measure the performance of our investment management team and related personnel. After scientifically and accurately measuring performance, the incentive system of our managers can be completely based on market-oriented principles Basically. Our annual bonus (annual bonus) is determined by the company's investment income. When the investment income is positive and reaches the target, our managers will receive bonus distribution according to the pre-agreed rules; when the investment income is negative, If we don’t meet the target, we won’t get the bonus.”
"To be specific, our GIC managers have relatively fixed basic salaries, and when we complete the annual goals, they can receive corresponding incentive compensation, mainly annual cash bonuses and risk return bonuses. Annual cash bonuses , is a short-term incentive; risk-return bonus is a medium-term incentive..."
"The most innovative one is a clawback system. Bonus incentives are not a feature of our GIC company. The most special thing is the 'clawback' system. When our actual investment return level is lower than what is required after risk adjustment When the return level is reached, the managers have to pay the company to show their responsibility. This process of losing money to the company is called callback within GIC!”
Li Xiaofan asked curiously: "Where does the money for this rebate come from? Is it deducted from your salary?"
"Haha, if it were deducted from our normal salary, we would have run away long ago!"
Zheng Yingjie shook his head and smiled:
"GIC has opened a wealth appreciation bonus reserve account for all our managers and each employee. When the bonus is positive, this wealth will be distributed to the reserve accounts of our managers and employees. However, this The money in the reserve account cannot be taken away in the same year. It is deferred and only a part of it is released every year. There is always a balance in this account, and there is a possibility of clawback when wealth is created. When it is a negative number, the bonus can be withdrawn from this account!”
"The original intention of designing the deferred incentive and clawback mechanism of our GIC is to tightly bind the interests of managers, employees and the company. In particular, the deferred mechanism achieves an efficient lock-in effect. Moreover, the higher the level, The longer managers are locked in, this creates the effect that senior managers pay more attention to long-term incentives and have a mentality similar to that of shareholders..."
Hearing this, Li Xiaofan suddenly realized that GIC's incentive system helps attract, select and retain outstanding talents, and helps motivate employees to establish a long-term concept when choosing investment portfolios, from the perspective of maximizing the long-term interests of shareholders. Think about problems and make decisions based on perspective...
He said happily: "Thank you, Mr. Zheng, I have learned a lesson! The information you provided is very important to me, and it is very inspiring for the incentive mechanism that our Yifan Investment Management Company will implement next. If it is convenient for you next time, I will come to you again I’m here to ask you for advice!”
"Director Li, you're welcome. As long as it's not our company's confidential information, I can tell you everything within my knowledge."
…
After Zheng Yingjie and his investment manager Shen Wanjun left, Li Xiaofan sent an email to several shareholders of the Pacific Online Bookstore project such as DFJ and IDG in the United States, as well as Hong Leong Group of Malaysia, telling them Their famous Singapore government investment company GIC is interested in investing in the Pacific Online Bookstore project and would like to first seek your opinions and ideas.
That night, Li Xiaofan received an email from Zhu Min from the Bay Area in the United States.
Li Xiaofan's "cold treatment" in the past few days has had an effect. Zhu Min, who is far away in the United States, saw that there was no movement from Li Xiaofan in Singapore and began to take the initiative to "cut prices."
He said in an email to Li Xiaofan: After another discussion with his Indian partner and his wife Susan, the three partners took into account the huge influence of Li Xiaofan, a Yahoo shareholder, and they were willing to increase the valuation of the WebEx project. Reduced to US$3.5 million, Li Xiaofan can invest US$1.05 million to obtain 30% of the shares...
Li Xiaofan smiled when he saw Zhu Min's new email. The "smart" spirit of Mingzhou people in doing business was vividly reflected in Zhu Min, but Zhu Min never expected that he, a reborn fellow from Mingzhou, would be smarter than him.
Li Xiaofan felt that this condition proposed by Zhu Min was basically acceptable.
So, he replied an email to Zhu Min: In principle, this condition is acceptable. When Li Xiaofan leads the team to San Francisco again to sign a formal investment agreement early next month, he can now let the lawyers of both parties draft the relevant investment agreement first...
…
The next day, several shareholders of the Pacific Online Bookstore project, including DFJ, IDG and Hong Leong Group of Malaysia, sent emails to Li Xiaofan one after another.
Their attitudes are basically the same: as long as the valuation is higher than the US$100 million when they invested, they very much welcome the famous Singapore government investment company GIC to invest in the Pacific Online Bookstore project. But as small shareholders, they ultimately listened to the opinions of major shareholder Li Xiaofan...
…
Three days later in the afternoon, Li Xiaofan was squatting in Dr. Mao Siming's magnetic sensing R&D center studying a batch of newly arrived semiconductor equipment when he received a call from Zheng Yingjie.
On the phone, he happily said: "Director Li, our company's internal meeting has just ended. I have good news for you. Your project has been approved!"