September 8 -- China Yurun Food (1068.HK) had recently granted stock options to C.E.O. Zhu Yiliang, and vice presidents Ge Yuqi, Feng Kuande, reports yicai.com, citing a company filing.
Zhu, Ge and Feng were granted stock options which enabled them to obtain 8.1 million shares, eight million shares, and seven million shares respectively. The stock options could be exercised at HK$18.04 per share.
However, the three senior executives sold all their existing shares at between HK$17.2 and HK$17.9 per share in the last week of August. Yurun Food said it was aware of the stake sales.
According to industry insiders, it was puzzling for the three senior executives to sell their shares at low prices, and obtain options that can be converted into shares at a higher price.
Zhu sold his entire stake of 2.45 million shares in the company, selling 1.037 million shares on August 24 at HK$17.715 per share, and 1.413 million shares at HK$17.881 per share on August 25, according to data from the Hong Kong Exchanges and Clearing.
Ge liquidated his shareholding of 2.5 million shares between August 24-26, while Feng sold his stake of 2.5 million shares in the August 29-31 period.
Zhu obtained HK$43.64 million from the stake sale, while Ge and Feng received HK$44.65 million and HK$43.12 million yuan, respectively.
An industry analyst said the three senior executives will exercise the stock options if shares of Yurun Food exceed HK$18 in future, and will not exercise the options if the company's shares fail to perform.
Separately, company chairman, Zhu Yicun, had purchased 10.3 million shares in Yurun Food at about HK$22 per share through Willie Holdings in July, raising his stake from 25.76 percent to 25.94 percent. At yesterday’s closing price of HK$16.62 per share, the stake purchase led to a loss of more than HK$50 million for Zhu.
The company announced on August 17 that it posted a 22.9 percent year-on-year rise in first half 2011 net profit to HK$1.61 billion, with earnings per share of HK$0.887, up 16.4 percent.
Shares of China Yurun Food fell 15.52 percent to trade at HK$14.04 at 15:37 today.
Source:capitalvue