Dissatisfied with an annual salary exceeding 4 million, Absen’s founder “does not want to be chairman.”

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A scene in which one “doesn’t want to be chairman” due to dissatisfaction with a multimillion-yuan salary is happening at Absen (300389.SZ), a company with a market value of less than 6 billion yuan.

Recently, the board of Absen reviewed and approved several proposals, including the “Election of the Chairman of the Sixth Board of Directors.” The founder and chairman, Ding Yanhui, was re-elected as chairman with “8 votes in favor and 1 against.”

This sole dissenting vote came from Ding Yanhui himself, citing “dissatisfaction with the chairman’s compensation.”

In fact, Ding Yanhui’s salary is not low.In 2024, his salary reached 4.3556 million yuan, a year-on-year increase of more than 50%.

Such growth stands in stark contrast with Absen’s performance: In 2024, Absen’s net profit attributable to shareholders fell by 66.82% year-on-year. Though it increased by more than 60% in Q3 this year, it still hasn’t returned to the same level as in the same period of 2023.

What Ding Yanhui is truly “dissatisfied” with might not be the millions in salary.

To understand Ding Yanhui’s tactics, we have to go back to a private placement three years ago.

In May 2022, to resolve Absen’s issue of having no controlling shareholder, Ding Yanhui subscribed for 41 million newly issued shares at 6.33 yuan per share, totaling 260 million yuan, instantly becoming the actual controller.

Afterwards, Absen began distributing dividends lavishly. From 2022 to 2024, the total dividends reached 701 million yuan, with Ding Yanhui, as the major shareholder, receiving 242 million yuan.

The largest dividend took place three months after Ding Yanhui became Absen’s actual controller. After three years without dividends, Absen distributed 537 million yuan in one go. Based on Ding Yanhui’s holding of 124 million shares at the time, he took home as much as 186 million yuan.

Summing up Ding Yanhui’s strategy: First, increase his holding of company shares through a low-priced private placement, then recoup cash flow via dividends.

In this way, he both gradually increased his equity to strengthen control over the company and used dividends to ease the financial pressure of acquiring additional shares.

But this approach doesn’t seem to work anymore.

In May this year, Ding Yanhui planned to subscribe for newly issued Absen shares at 7.80 yuan per share, for a total not exceeding 360 million yuan, but this was rejected by the shareholders’ meeting.

This may be a major reason why Ding Yanhui cast the dissenting vote this time.

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