Gree Electric Appliances Inc., China's largest domestic air-conditioner maker, unexpectedly announced pay raises for virtually all of its 70,000 employees in the wake of two key personnel changes and amid lingering negative publicity over a failed bid to buy an electric-car company.
Starting in December, employees who have worked at the Zhuhai-based company for more than three months will see their monthly salary rise by 1,000 yuan from their current amounts, the company announced Friday.
Gree will have to spend an extra 847 million yuan each year to cover the salary raises, an amount equivalent to about 6.8% of the company's net profit for 2015.
The move came days after Gree scrapped a bid to acquire local electric-car firm Zhuhai Yinlong New Energy Co. Ltd. in an effort to diversify its business.
Gree's board had initially proposed to fund the Yinlong deal by issuing additional stock worth 9.7 billion yuan to specific shareholders, but the move was voted down by smaller shareholders excluded from the plan who feared the value of their shares would be diluted.
Two recent management changes have also helped to taint the image of the home-appliance giant. Dong Mingzhu, Gree's chairwoman and president, was removed two weeks ago from the post of chairperson of the government-held Gree Group, the largest shareholder in the firm.
The move was ordered by the authority that oversees state-owned firms, the State-Owned Assets Supervision and Administration Commission of Zhuhai. On Tuesday, board member Meng Xiangkai also tendered his resignation, saying he wanted to "change jobs."
However, some industry watchers question whether the move by Gree was designed to irk the smaller shareholders who had blocked the funding plan for the Yinlong acquisition.
Shares in the Shenzhen-listed Gree Electric Appliances rose 3.2% to 27.23 yuan on Friday.
Gree Electric Appliances Inc., China's largest domestic air-conditioner maker, unexpectedly announced pay raises for virtually all of its 70,000 employees in the wake of two key personnel changes and amid lingering negative publicity over a failed bid to buy an electric-car company.
