[ET Net News Agency, 24 September 2018] China Telecom (00728) announced on 21 September
that its board had approved the proposed adoption of the Share Appreciation Rights Scheme
for key personnel, which is still subject to the approval of SASAC (State-owned Assets
Supervision and Administration Commission) and its shareholders.
The total number of the appreciation rights to be granted will not exceed 10% of total
issued share capital, and the maximum gains from exercising the rights will not exceed 40%
of total remuneration of the incentive recipients. The scheme is a medium-term incentive
plan for China Telecom, with a 24-month lockup period, and 36-month vesting period
afterwards.
Nomura said this is not the first time China Telecom has launched a share appreciation
plan; for instance, the previously most recent one started in 2012 and expired in 2016.
The research house thinks it generally serves as a positive incentive for China Telecom,
to encourage key personnel to realise their potential and to strengthen the company's
competitiveness.
It also thinks the share appreciation plan and management appointment should help
company to focus on its long-term growth strategy, especially during the 5G rollout, which
provides a game changing opportunity for telco operators.
Nomura said China Telecom has the best execution power among the three operators, and
the incentive plan may help to encourage key talent to deliver better business results
within the competitive environment. It maintained its "neutral" on China Telecom, with a
target price of HK$4. (KL)