① The total number of incentive recipients granted for the first time in the 2024 Restricted Stock Incentive Plan of China and Micro accounted for 99.72% of the company's total number of employees, and the grant price was 76.10 yuan per share; ② The performance target design of this equity incentive plan is quite special and will be compared with the average sales growth rate of the top five global semiconductor equipment manufacturers, including Asmack.
“Science and Technology Innovation Board Daily”, March 28 (Reporter Guo Hui) China Micro, a leading domestic semiconductor equipment company, recently released the 2024 Restricted Stock Incentive Plan (draft).
According to the announcement, the total number of incentive recipients granted for the first time under this incentive plan was no more than 1,798, accounting for 99.72% of the company's total number of employees, almost achieving “equal exposure to rain and dew.” The number of restricted shares granted was no more than 10.8 million shares, accounting for about 1.74% of the company's total share capital when the draft incentive plan was announced.
Furthermore, the initial grant price for restricted shares this time was 76.10 yuan per share. This price was determined by determining 50% of the average trading price of the company's A shares of 152.17 yuan per share on the trading day before the announcement of the incentive plan. As of the close of trading today (March 28), the latest stock price of CCW was 149.26 yuan/share.
It is worth noting that the conditions for ownership of the restricted shares of China and Micro are quite special this time. According to the announcement, the company's equity incentive plan design selected the cumulative revenue growth rate X for the four fiscal years 2024-2027, and then compared it with the average growth rate of the top five companies in the sales ranking of global semiconductor equipment manufacturers as a performance assessment.
Ownership conditions for CCME's 2024 restricted shares (partial)
A staff member of the securities department of China and WeChat told the “Science and Technology Innovation Board Daily” reporter that the company adopted this performance assessment method as early as 2023 in the equity incentive plan. Regarding whether the target was achieved during the first vesting period of the previous incentive plan, that is, the gap between the 2023 revenue growth rate and the target company, the person said “the subsequent announcement shall prevail.”
According to information, under the trend of localization in the semiconductor industry, domestic semiconductor manufacturers' performance and market size have increased significantly over the past year, while the global semiconductor market has contracted as a whole. According to the latest data released by the international semiconductor organization SEMI, global semiconductor equipment sales in 2023 were 105.6 billion US dollars, down 1.9% year on year; semiconductor equipment sales in mainland China increased 28.3% year on year.
Whether it is possible to achieve equity incentive goals well may present certain challenges for China and Micro companies.
The overall performance growth rate of China and Micro in 2023 was high. According to financial reports, operating income in 2023 was about 6.264 billion yuan, an increase of about 1,524 billion yuan over 2022, an increase of about 32.15%; net profit to mother was about 1,786 billion yuan, an increase of 52.67% over the same period last year.
Although the overall market size of overseas semiconductor equipment will decrease in 2023, institutions such as SEMI expect the industry to recover in 2024, and the revenue and growth rate of the world's top semiconductor equipment giants will still have bright spots in 2023.
According to CINNO Research's statistics for the third quarter of last year, the ranking of the top five semiconductor equipment manufacturers in the world has been stable in recent years.
Among them, Dutch company ASML's revenue for the third quarter of 2023 was about 7.1 billion US dollars, surpassing the US company AMAT for the third quarter in a row, ranking top 1; Applied Materials' 2023 Q3 revenue was about 6.3 billion US dollars, ranking second; US company Panlin (LAM) returned to third place; Japanese company Tokyo Electron (TEL) fell out of the top three to rank fourth; and US company KLA (KLA) steadily ranked fifth. In terms of revenue, the total revenue of the semiconductor business of the top five equipment companies in the third quarter of 2023 has exceeded US$22 billion, accounting for 88% of the total revenue of the top 10.
The semiconductor industry is hovering at a low point in 2023, but ASML revealed at the beginning of this year that the company's revenue for the full year of 2023 reached 27.559 billion euros, up 30.16% year on year, and gross margin was about 51.3%; net profit was 7.839 billion euros, up 39.38% year on year, and new orders for the whole year were about 20.40 billion euros. Regarding this year's performance outlook, ASML expects revenue for 2024 to be roughly the same as 2023, with the company's revenue for the first quarter of 2024 being between 5 billion and 5.5 billion euros
In addition, US Applied Materials achieved revenue of US$26.52 billion for the full year of fiscal year 2023, a record high, but an increase of 2.83% over 2022. Fanlin Group's share of revenue in the Chinese market declined in 2023, but according to previously released financial reports, Fanlin's revenue for the December 2023 quarter was US$3.758 billion, up from the September quarter of 2023.
Yuan Shuai, an expert from the Whale Platform think tank and deputy secretary general of the Zhongguancun Internet of Things Industry Alliance, said in an interview with the “Science and Technology Innovation Board Daily” reporter that the performance assessment targets in the CCW equity incentive draft are compared with the performance growth of the top five global semiconductor equipment manufacturers. This setting is indeed unique.
He said that considering the good performance of the domestic semiconductor industry under the trend of localization and the contraction in the size of the global semiconductor equipment market, the target for simple comparative growth may seem low. However, this comparison may be aimed at motivating companies to stay ahead of global competition, not just with domestic peers. As to whether it can effectively stimulate the company's growth, we still need to observe actual implementation and market feedback. If the company can continue to surpass its global peers, then such assessment conditions will undoubtedly have a positive impact on the company's growth.
Zhi Peiyuan, a master's supervisor at the China University of Mining and Technology (Beijing) School of Management, told the “Science and Technology Innovation Board Daily” reporter that from a strategic perspective, the assessment conditions for China and Micro are designed to motivate the company to continue to improve its competitiveness and promote the company to maintain its leading position in the global market through benchmarking with leading companies in the industry. However, a single growth rate comparison may not be sufficient to fully reflect the company's strategy execution effectiveness and market adaptability.
In the context of the Securities Regulatory Commission's emphasis on protecting investors' rights and interests, Zhi Peiyuan said that it is recommended that when setting assessment indicators, listed companies should make more comprehensive considerations including but not limited to multi-dimensional indicators such as market share, technological innovation capabilities, and customer satisfaction to ensure the effectiveness and comprehensiveness of incentive plans, while fully considering investors' interests.