Yanghe Chairman Gu Yu's Dilemma: Employee Stock Ownership Plan Expires, Key Executives Trapped

Text | Luka

Editor | Liu Peng

On the evening of March 9, Yanghe Co., Ltd. announced that the first phase of its core backbone shareholding plan will expire on September 10, 2026. If not extended, this means that the 6,379,081 shares currently held under the plan will be gradually sold on the secondary market. Compared to the subscription price of 103.73 yuan per share, Yanghe’s closing price on March 9 was 51.17 yuan per share, nearly halving.

Employee Shareholding Plan Starting from Zhang Liandong’s Era

According to public information, Yanghe Co., Ltd.‘s first phase of the core backbone shareholding plan began in 2021. That year, the liquor industry was thriving. After doubts about previous years’ “stalling,” Yanghe actively sought change. On February 23, 2021, Zhang Liandong appeared at the shareholders’ meeting for the first time and was elected as the new chairman of the board.

In July 2021, Yanghe announced the first phase of its core backbone shareholding plan. The shareholding scale did not exceed 9,661,310 shares, accounting for about 0.64% of the company’s total share capital as of the plan announcement date. The plan’s duration was 36 months, with a 24-month lock-up period for the shares acquired.

For this plan, Yanghe set performance targets: in 2021, operating revenue should grow by at least 15% compared to 2020, and in 2022, it should grow by at least 15% compared to 2021. If the performance targets were not met, the shares would be sold at the end of the lock-up period, and the return to holders would be based on the lower of the invested amount and the sale proceeds (after deducting related expenses). Remaining profits would belong to the company.

On September 11, 2021, Yanghe announced that the shares related to the core backbone shareholding plan had been transferred on September 9, 2021. The transferred shares totaled 9,118,384, representing 0.61% of the company’s total share capital, at a price of 103.73 yuan per share.

At that time, Yanghe’s then-Chairman Zhang Liandong, President Zhong Yu, Executive President Liu Huashuang, and 12 other senior executives were on the plan’s list, with Zhang Liandong, Zhong Yu, and Liu Huashuang each holding up to 10 million shares.

After the prosperous 2021, despite the liquor industry facing rapid changes, stricter regulations, and increased competition in 2022, Yanghe still achieved good performance growth. According to annual reports, Yanghe’s revenue increased by 20.14% in 2021 compared to 2020, and by 18.76% in 2022 compared to 2021, meeting the performance targets of the shareholding plan.

On September 12, 2023, Yanghe announced that the lock-up period for the shareholding plan expired on September 10, 2023, and all shares held under the plan were unlocked. Since the performance targets had been met, the assets of the shareholding plan will be gradually sold.

Stock Price Slump: Can the Deeply Trapped Core Backbones Break Free?

Although the performance targets were perfectly met and all shares were unlocked, the core backbones did not experience a joyful moment. Since 2023, Yanghe’s stock price has been declining. After reaching a peak of 158.78 yuan during trading on January 13, 2023, by the time the lock-up period expired on September 10, 2023, the stock price had fallen to around 120 yuan per share. Since then, the stock continued to fluctuate downward, and by late November 2023, it had fallen below the subscription price of 103.73 yuan per share.

Facing the dilemma of unrealized gains due to falling stock prices, Yanghe extended the shareholding plan twice. On August 10, 2024, Yanghe announced a 12-month extension of the plan until September 10, 2025. According to the announcement, before August 10, 2024, none of the core backbones had sold any shares, and the number of shares held remained at 9,118,384, accounting for 0.61% of the company’s total share capital.

On August 9, 2025, Yanghe announced another extension of the plan for 12 months, until September 10, 2026, the official expiration date. However, between August 10, 2024, and August 9, 2025, the plan sold 2,739,303 shares, likely resulting in some core employees incurring losses and leaving.

On the evening of January 23, 2026, Yanghe issued two market-shaking announcements. The first stated that, based on the 2025 full-year performance forecast, net profit attributable to shareholders was expected to be between 2.1 billion and 2.5 billion yuan, a decrease of about 60% year-on-year. Combining this with the third-quarter report, it was estimated that the fourth quarter would incur a loss of approximately 1.4 billion to 1.9 billion yuan. The second announcement adjusted the total annual cash dividend from not less than 7 billion yuan and not less than 70% of net profit attributable to shareholders to not less than 100% of net profit attributable to shareholders.

After these announcements, Yanghe’s stock price fell again. On January 23, it closed at 62.55 yuan per share, then continued to decline to a low of 50.14 yuan. With only six months remaining until the plan’s expiration, in the context of the overall downturn in the liquor industry and Yanghe’s persistently low stock price, will the “deeply trapped” core backbones be able to free themselves? Will the plan be extended for a third time? How to motivate core employees to promote company development? Yanghe’s Chairman Gu Yu, who took office less than a year ago, faces a test.