People
The People
Governance Grade: C+. The Xu family controls the company through both operational leadership (Xiang Xu as Chairman/CEO) and legacy influence (founder Guangfu Xu stepped down in 2023). This is a family-controlled Chinese company listed in the US via a VIE structure, with long-tenured board members and limited independent oversight visible from public filings. The positive offset is real skin in the game — the CEO owns 9.4% of shares worth ~$131M.
The People Running This Company
The August 2023 leadership transition is the defining governance event. Founder Guangfu Xu and long-serving CEO Longgen Zhang both departed, with the founder's son Xiang Xu assuming both Chairman and CEO roles. This is a dynastic succession — not unusual for Chinese companies, but it concentrated power in one person during the worst downturn in the company's history. Anita Zhu (Deputy CEO) appears to run day-to-day operations and handles most analyst interactions, suggesting Xiang Xu delegates operational management.
What They Get Paid
Cash compensation of $4.4M for all directors and officers combined is modest for a company this size. The issue is SBC: $556M over four years (FY2022-2025), with $307M in FY2022 alone. Four share incentive plans have authorized over 112 million ordinary shares (~33% of current outstanding). The 2022 plan alone authorized 37.3 million shares with a 15-year life.
SBC as a percentage of revenue has increased every year (5.2% to 8.4%) even as the business deteriorated. This means management compensation is absorbing a growing share of the shrinking revenue pie. Total authorized shares under incentive plans represent potential dilution of ~33%.
Are They Aligned?
Skin-in-Game Score (1-10)
CEO Ownership (%)
Max Dilution from Plans (%)
Buybacks FY22-24 ($M)
Skin-in-the-game score: 5.3 / 10. CEO ownership is genuinely significant ($131M personal stake), and the buyback program demonstrated conviction during the downturn. But the SBC programs systematically dilute outside shareholders, the related-party credit loss raises governance questions, and extreme customer concentration (one customer at 38.9% of revenue) creates dependence risk.
The workforce reduction from 5,765 (FY2023) to 3,842 (FY2025) — a 33% cut — shows management willingness to adjust costs, though SG&A has not declined proportionally ($118M in FY2025 on $665M revenue = 17.8% of sales, versus 9.2% in FY2023).
Board Quality
The board disclosure is remarkably opaque for an NYSE-listed company. The 20-F filing's Item 6 (Directors section) in the available data contains no named board members — an unusual gap. External sources indicate a long-tenured board (~14.5 years average), which suggests limited fresh perspective. The combined Chairman/CEO role with no lead independent director creates a structure where management oversight is weak.
The Verdict
Governance Grade
Strongest positives: CEO owns 9.4% of the company ($131M personal stake), executed $616M in buybacks when shares were cheap, and maintained a fortress balance sheet through the downturn. Cash compensation is modest. Management communication on earnings calls is direct and realistic about the downturn.
Real concerns: Combined Chairman/CEO, family succession, opaque board disclosure, SBC programs that represent ~33% potential dilution, related-party credit extended to a government entity, and the fundamental VIE structure that separates legal ownership from economic control.
What would most change the grade: Appointing an independent lead director, disclosing full board composition and committee memberships, and reducing SBC to under 4% of revenue would collectively upgrade the governance grade to B+. Conversely, additional related-party transactions or continued SBC at 8%+ of revenue during losses would push toward C-.