Within the seven-year incentive plan, the exercise of the share options must consider a number of conditions. For example, the company's annual net profit growth rate must be no lower than 10 per cent during the period from 2007 to 2009, and the return rate on net assets must be controlled so that it is no less than 8 per cent, according to the company's statement sent to the Shanghai Stock Exchange yesterday.

The total of 80 million share options will be allocated in two branches, with 60 million first going to the top managers and selected staff. The remaining 20 million will be reserved to reward newly recruited qualified staff.

Qingdao Haier's stock option incentive plan closely resembles that which was launched by Baosteel Group one week earlier. Dozens of Shanghai's and Shenzhen's listed companies have announced management incentive plans so far in a bid to attract more investors from the capital market.

"The share option incentive scheme represents a developing trend of China's enterprises, which is now receiving more and more attention," said Sun Lijian, a professor of the Economy College of Fudan University in Shanghai.

"Whether stock prices serve more as the barometer of the company's performance is an important index to judge the maturity of an economy. It is high time for Chinese listed companies to shift concern from focusing on personal income to maximizing shareholders' interests as a whole," he added.

It is also regarded a good way to stabilize companies' capital sources and dodge stock price risks caused by malicious speculation, Sun said.

The company also confirmed in yesterday's statement that a sales company will be set up in Southwest China's Chongqing Municipality, with a sales network of 42 outlets to be created throughout the country.

By doing this, Qingdao Haier, will enjoy an independent sales platform, which would reduce the connected transaction with its parent company, Haier Group, and simplify the sales process.

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