---
title: "After Achieving 'Top Five and 100 Billion', Yili Sets Sights on World No. 1, Launches Another Equity Incentive Plan"
description: "On August 1, 2019, Yili's wholly-owned subsidiary Hong Kong Commercial Trading Holdings Co., Ltd. acquired 100% equity of New Zealand's Westland Co-operative Dairy Company Limited. This is another major step in Yili's external growth, not only boosting its own development but also demonstrating the true strength of Chinese enterprises to the world. Just four days later, Yili launched its fourth equity incentive plan since listing. On the evening of August 5, 2019, Yili announced a restricted stock incentive plan (draft) with five tranches unlocking over a six-year period, granting 183 million shares to 474 people including directors and senior executives, accounting for 3% of total shares, at an issue price of 15.46 yuan per share."
author: "李青林"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-08-11"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/after-achieving-top-five-and-100-billion-yili-sets-sights-on-world-no-1-d45e46fe/"
markdown: "https://xinjignxiao.com/en/articles/after-achieving-top-five-and-100-billion-yili-sets-sights-on-world-no-1-d45e46fe.md"
original_source: "https://mp.weixin.qq.com/s/oaLs5wGAhoQUoldESvfVoQ"
translation: "https://xinjignxiao.com/zh/articles/%E5%AE%8C%E6%88%90-%E4%BA%94%E5%BC%BA%E5%8D%83%E4%BA%BF-%E5%86%B2%E5%87%BB%E4%B8%96%E7%95%8C%E7%AC%AC%E4%B8%80-%E4%BC%8A%E5%88%A9%E5%86%8D%E6%8E%A8%E8%82%A1%E6%9D%83%E6%BF%80%E5%8A%B1%E8%AE%A1%E5%88%92-d45e46fe.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/after-achieving-top-five-and-100-billion-yili-sets-sights-on-world-no-1-d45e46fe/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# After Achieving 'Top Five and 100 Billion', Yili Sets Sights on World No. 1, Launches Another Equity Incentive Plan

> On August 1, 2019, Yili's wholly-owned subsidiary Hong Kong Commercial Trading Holdings Co., Ltd. acquired 100% equity of New Zealand's Westland Co-operative Dairy Company Limited. This is another major step in Yili's external growth, not only boosting its own development but also demonstrating the true strength of Chinese enterprises to the world. Just four days later, Yili launched its fourth equity incentive plan since listing. On the evening of August 5, 2019, Yili announced a restricted stock incentive plan (draft) with five tranches unlocking over a six-year period, granting 183 million shares to 474 people including directors and senior executives, accounting for 3% of total shares, at an issue price of 15.46 yuan per share.

On August 1, 2019, Yili's wholly-owned subsidiary Hong Kong Commercial Trading Holdings Co., Ltd. acquired 100% equity of New Zealand's Westland Co-operative Dairy Company Limited. This is another major step in Yili's external growth, not only boosting its own development but also demonstrating the true strength of Chinese enterprises to the world.

Just four days later, Yili launched its fourth equity incentive plan since listing. On the evening of August 5, 2019, Yili announced a restricted stock incentive plan (draft) with five tranches unlocking over a six-year period, granting 183 million shares to 474 people including directors, senior executives, and core technical (business) personnel, accounting for 3% of total shares, at an issue price of 15.46 yuan per share. Yili announced the "2019 Restricted Stock Incentive Plan" (hereinafter referred to as the "Incentive Plan"), which is an incentive and restraint mechanism for more than 400 "company directors, senior executives, core technical (business) personnel, and other employees."

**After 'Top Five and 100 Billion', Yili Aims for Global Dairy No. 1**

So why did Yili launch the incentive plan at this time? This stems from Yili's strategic layout. As early as 2014, Yili proposed to achieve the "Top Five and 100 Billion" goal by 2020, which includes becoming one of the global top five dairy companies and achieving revenue exceeding 100 billion yuan. Now that 2019 is more than half over, the coming months are crucial for Yili.

In 2018, Yili achieved total operating revenue of nearly 80 billion yuan and net profit of 6.439 billion yuan. It can be said that in the Chinese dairy market, Yili has no rivals. With this momentum, achieving the 100 billion yuan target by 2020 is not difficult, and Yili will also rank among the world's top five dairy companies in 2020. The "Top Five and 100 Billion Plan" is only the first stage of Yili's future development.

It is understood that after achieving the 2020 goal, Yili will aim for the ambitious targets of becoming the world's No. 1 dairy company and top five in global healthy food by 2030. Talent is the key to whether this goal can be achieved. Therefore, when Yili's incentive measures appeared, many institutions believed that Yili was using equity incentives to consolidate core talent.

**Previous Equity Incentive Plan Boosted Yili's Morale**

This is not the first time Yili has used an equity incentive plan. In 2016, Yili launched a restricted stock incentive plan targeting over 270 core business and technical personnel. It was this key measure at a critical time that tightly bound personal interests with the company's development goals. In the following three years, Yili achieved rapid and steady growth, successively launching strategic products such as Ambrosial, Changqing, and Jilinguan Ruihu, with the high-end product Jindian breaking the 10 billion yuan mark, creating an industry miracle of 79.8 billion yuan in revenue and 6 billion yuan in profit in 2018, widening the revenue gap with Mengniu to 10 billion yuan and nearly doubling its profit. Prior to this, facing severe market homogenization, high saturation, market uncertainty, and unattainable goals, Yili's team morale had significantly declined. During that period, Yili suffered enormous internal and external resistance, and progress toward goals was slow. The launch of the restricted stock incentive plan gave Yili a stable and highly effective team.

Now, Yili is once again launching a stock incentive plan, hoping to align the goals of the enterprise and core team through this plan, which will clearly provide new momentum for Yili's future development. The "win-win" situation created by this restricted stock incentive plan will also become an important fulcrum for Chinese enterprises to leverage the global dairy landscape.

**Features of This Incentive Plan**

**1. Broad Incentive Coverage**

From the scope of this incentive, Yili's restricted stock incentive plan is the largest in scope, with a total of 474 incentive recipients, the highest number in Yili's history of equity incentives. This includes directors, senior executives, core technical (business) personnel, and other employees who have a direct impact on the company's operating performance and future development, as identified by the company at the time of the plan announcement.

**2. Certain Risk**

However, looking at the incentive plan itself, although there appears to be a doubling of profit space, in reality, facing 45% personal income tax and about 50% financing costs over six years, the actual return rate is within 5% at current stock prices, and a slight misstep could lead to losses. Coupled with the current uncertain international and domestic economic situation, the attractiveness of this incentive plan is not as significant as imagined.

**3. Strict Assessment with Individual Performance Indicators**

In Yili's incentive plan, there are strict regulations on company performance assessment. Taking the fifth tranche unlocking condition in 2023 as an example, while core team members must complete their individual performance assessments, the company's performance must also achieve a compound annual growth rate of net profit of 8.2% from 2019 to 2023, based on 2018 net profit, and a return on net assets of no less than 15%. Additionally, Yili has set individual business performance indicators for incentive recipients, with 474 sets of corresponding assessment data for 474 people. The specific performance indicators are graded as excellent, good, pass, or fail, considering the performance of the position from all dimensions and refining the assessment standards. For example, specific profit indicators for business units and market share indicators for single products compared to competitors. Therefore, in many cases, regardless of price, obtaining the qualification for restricted stock is not easy; it requires continuous dedication and effort from an employee.

**4. Free Choice and Reasonable Risk Control**

Of course, to give incentive recipients freedom of choice and fully reflect the principle of coexistence of returns and risks, the stock purchase is made in cash and linked to future performance. Management must fully invest in improving performance to realize the incentives, which also demonstrates the confidence and determination of incentive recipients to drive future business development.

**5. Behind the Incentive Plan Is a Slowing Dairy Market**

Although Yili has achieved good results in recent years, looking at the domestic and international dairy markets, it is not difficult to see that the growth of dairy companies has slowed. According to the latest annual global largest dairy company survey by Rabobank, in 2018, adverse weather conditions in major export regions, a strong US dollar, and exchange rate changes affected the total turnover of the top 20 global dairy companies. In US dollar terms, annual growth was still seen at 2.5%, compared to 7.2% last year; however, in euro terms, combined turnover in 2018 decreased by 2.0%, compared to an upward trend of 5.1% in 2017.

In the latest global dairy top 20 ranking, Yili ranked eighth, with a year-on-year growth of 13.4% in US dollar terms last year. From the actions of the top 20, it can be seen that dairy product growth is slowly slowing, and many companies are beginning to invest in products beyond basic dairy, such as cheese and animal-free protein, with mergers and acquisitions becoming a new trend. Data shows that in 2018, there were 111 transactions in the dairy industry, slightly lower than 127 transactions last year. As of mid-2019, the number of dairy transactions had reached 85, of which 32 were cross-border. Yili has also made cross-border acquisitions, such as a Thai ice cream brand and New Zealand's second-largest dairy cooperative, Westland, and has also cooperated with Uruguay's largest dairy company, Conaprole.

Returning to the domestic market, although Yili's average profit growth over the past 10 years has indeed exceeded 8%, the reality is that most consumer industries have slowed down, including the dairy industry. Over the past five years, the compound annual growth rate of revenue for dairy industry companies has dropped to 4.22%, while Yili's figure is 7.8%, which is already a good result. Except for the top few dairy companies, the net profit growth of other dairy companies is almost zero.

It can be said that under the dual pressure of slowing global dairy growth and Yili's ambitious goals, the equity incentive plan launched by Yili can lock in talent and achieve set goals with a more stable team. At the same time, Yili is sending an important signal to the outside world: it will maintain management stability for a considerable period, and it also tells the outside world that Yili's strategic goals will not change easily. With an excellent team leading, Yili's profits will also grow steadily.

Tips will be paid 400-2000 yuan once adopted.


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671