Gome Board Reshuffle

Although Zhang Dazhong, chairman of the new board of Gome, called out "the story is over, I have worked", the voice tried to shift the focus of the media away from the civil war of Gome, but the story of Gome seemed to go on.

In May 9, 2011, Gome announced that it would re organize the board of directors at the annual general meeting held in June 10th, reducing the number of directors from 13 to 11.

Almost at the same time, Chen Xiao, the former director of Gome, reopened the whole process of the civil war in Gome, and disclosed the Gome store.

The aftermath of Gome's civil war is still on the horizon, but how will the two executives who have been cleaned out of the board of directors go? How will the board of directors of Gome manage to function properly?

What are the reasons behind the personnel changes?

Go behind management.

"This is a result that everyone can expect. After the Wong Kwong Yu family regains control of Gome, it will definitely subvert the policies of the Chen Xiao era, and for those who once dominated the management of the board of directors, being cleaned is already the result of doomed."

A senior executive who left Gome told reporters.

At the beginning of March this year, when Chen Xiao's resignation was repeated again and again, the outside world once speculated that President Wang Junzhou was very promising to become Chen Xiao's successor. However, the executives said, "this is impossible. In the eyes of the Wong Kwong Yu family, the two top executives of Wang Junzhou and Wei Qiuli are no longer trustworthy, mainly because last year's two key executives in several key boards of directors did not stand on the side of major shareholders."

Sure enough, Zhang Dazhong, who has retired, has become chairman of Gome's board of directors. Although Wang Junzhou and Wei Qiuli have temporarily retained the executive director's position, Gome has already decided that they will be removed from the board of directors at the annual general meeting. Huang's argument is that "he has strong executive power, but he lacks the ability to make major decisions."

Reporters learned that Wang Junzhou and Wei Qiuli were the most trusted executives of Wong Kwong Yu, and they entered the board of directors of Gome in September 2008. Two months later, Wong Kwong Yu and his wife were arrested, and two of them became representatives of the legal documents made by the Wong Kwong Yu family. At that time, Wong Kwong Yu hoped that the two "close ministers" could help them maintain control over the board of directors of Gome.

In fact, Chen Xiao thought of leaving as soon as possible, and the relationship between Wang Junzhou and other executives and Chen Xiao was also very intense. However, after Wong Kwong Yu was arrested, Huang Xiuhong, Huang Yanhong and other family members could not be contacted. At that time, as the second largest shareholder of Gome, Chen Xiao was elected chairman of the new board of directors.

However, in response to this change in personnel, Huang Xiuhong returned to Gome in March 2009 and proposed Wong Kwong Yu's wish to become chairman of the board of directors. However, this proposal was opposed by senior executives such as Chen Xiao and Wang Junzhou, and Chen Xiao He and Wang Junzhou had begun to look for Gome strategic investors, and began negotiations with a number of agencies including Bain investments.

Huang Xiuhong did not directly participate in the negotiations on the introduction of Bain investment, but he got a letter from Wong Kwong Yu, saying that "selling the Gome mall as far as possible, and abandoning the holding status if it is impossible to sell", apparently the negotiations on attracting foreign investment were approved by the Wong Kwong Yu family.

However, the two executives of Wang Junzhou and Wei Qiuli seem to be getting closer to Chen Xiao. According to Chen Xiao, "they have been with me for a long time, and they have accepted my idea of reforming Gome."

In July 2009, after introducing Bain investment, Gome launched the management equity incentive measures. In May 11, 2010, after the big shareholder denied the bain investment, Wang Junzhou and other voters re nominated three non-executive directors. In June, Wang Junzhou became president, and these behaviors were regarded as betrayal by the Wong Kwong Yu family. Wong Kwong Yu wrote letters in July 2010, asking Chen Xiao, vice president Sun Yiding, Wang Junzhou and Wang Junzhou to resign.

Despite the intensification of the conflict between Chen Xiao and Wong Kwong Yu in August 5th, Wei Qiuli rested on illness, and Wang Junzhou refused to judge the major shareholders in public and tried to maintain a neutral role, nor did he attend the meeting of executives and media in August 12th. However, in the eyes of large shareholders, Wang Junzhou was no longer trustworthy, while Wei Qiuli had abandoned her studies in the school of management at the Huang family's request, but it seemed to have plans to leave. In early 2011, she sold part of the equity interest.

Deformed board of directors

For the arrangement of Wang Junzhou and Wei Qiuli to leave the board of directors, the reason given by the large shareholders is very official. That is, according to the provisions of the articles of association, at the annual general meeting of shareholders every year, the 1/3 directors at that time shall retire from office (as an exception to the company chairman or executive director), and every three years, each director shall at least turn back any time.

According to Gome's relevant regulations, Wang Junzhou, Wei Qiuli and Thomas Joseph Manning three people have reached the rotation cycle of the annual general meeting of shareholders. However, if a retired director is eligible for re appointment, he may choose to reappointment at the annual general meeting. Wei Qiuli's departure is due to poor health.

Huang Yanhong also left the board of directors for the sake of balance.

People close to the Wong Kwong Yu family pointed out that Huang Yanhong had joined the board of directors at that time. "Now that the board of directors has moved smoothly, it is normal for her to quit."

It is worth noting that after the three people such as Wang Junzhou, Wei Qiuli and Huang Yanhong quit, Gome's board of directors will add an independent non-executive director Wu Weixiong.

Wu Weixiong is a partner in Hongkong law firm and notarization company.

There will be two executive directors, five non-executive directors and four independent non-executive directors in Gome's new 11 person board of directors.

In addition to the unknown position of Wu Weixiong, Huang's camp has six people including Zhang Dazhong, Zou Xiaochun, Wu Jianhua, Chen Yusheng, Li Gangwei, and Shi Xiping, and Bain Capital has four members, namely, Zhu Jia, Shi Xiping, Ian and ThomasJosephManning.

On the surface, big shareholders and Bain investments still maintain balance in the board of directors. In fact, large shareholders have controlled the board of directors by absolute majority. The most important thing is that management has all left the board of directors, and Zou Xiaochun has become the most important legal representative.

Liu Buchen, an expert in home appliance industry, said: "this is a deformed board of directors, and management is totally excluded. The protection of the interests of the management will not be able to do so. Originally, Huang family wanted to rectify the practice of the management of the board of directors in the Chen Xiao era, but it seems to be overcorrecting."

Chen Xiaoceng told reporters, "after I leave, the interests of management will not be guaranteed, and the management incentives I have introduced are hard to maintain."

The source told reporters that the board of directors of Gome has really begun to discuss whether to cancel the management incentives. If so, can the management of Gome and the management team in the middle or higher levels be able to stand the test?

An electrical chain industry executive said, "if I leave the board of directors, if management incentives are cancelled, if I were Wang Junzhou, I would choose to leave Gome."

After Chen Xiao and others have left, if Wang Junzhou and Wei Qiuli choose to leave, Gome's management will face the risk of a thorough exchange of blood.

Chen Xiao's "uncovering the curtain" at this moment was seen as a "villain" by the outside world, but it did point out the ghosts of Gome. When the management of the Chen Xiao strategy once left, Gome will face an unprecedented crisis.