UpdatePR raises question of conflicting interests as it ties remuneration to clients’ share price performance
Shenzhen PR firm Zhixing has been awarded options by several Hong Kong-listed companies
A Shenzhen public relations firm is at the centre of see-sawing price movements in several Hong Kong-traded stocks -- and is getting paid for boosting its clients’ market capitalisation -- raising questions whether it might have overstepped the boundary between proper advice and conflicting interests.
Maple Leaf, which runs international schools in several Chinese cities, had awarded options to Zhixin on June 8, 2015 at an exercise price of HK$4 per share while its stock was trading at HK$2.83 each, with a market value of HK$3.8 billion, according to filings.
The PR firm could exercise two-fifths of the awarded options if Maple Leaf’s capitalisation were to double to no less than HK$8 billion for 15 consecutive days, while the remaining options can be exercised when the market value is at least HK$10 billion for 15 days, according to the filings.
For its work over three years, Zhixin could make a total of up to HK$80 million, or HK$26.7 million per year, if it were to sell Maple Leaf’s stock at the 52-week high of HK$8.57 per share.