Alibaba bonus scheme strengthens Ma's control

Wed Aug 13, 2014 7:00am EDT
 
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By Matthew Miller

BEIJING (Reuters) - Jack Ma, founder and executive chairman of Alibaba Group Holding, holds deep sway over executive and board appointments at China's biggest e-commerce company, and that influence is set to strengthen further at the firm, which is heading towards a New York IPO that is expected to raise more than $15 billion later this year.

In Alibaba's latest filings with the U.S. Securities and Exchange Commission (SEC), it said Ma this year initiated a bonus program that allowed senior executives and Alibaba staff to acquire share rights at an affiliated company he controls.

Alibaba on Tuesday underscored the potential conflict of interest from Ma's role as Alibaba's executive chairman and as the controlling shareholder at the company which holds Alibaba's affiliated Alipay payment business - even as the company said it was forging a closer relationship with the unit.

"If conflicts arise," Alibaba said in an amended SEC filing, "such conflicts may not be resolved in our favor."

Companies routinely amend their filings ahead of an IPO. In Tuesday's filing, Alibaba expanded its "risk factors" comments, but it was not clear whether this reflected any concerns raised by the SEC or potential investors.

Alibaba's CEO Jonathan Lu, chief people officer Lucy Peng, and chief risk officer Shao Xiaofeng, are among 20 senior executives who have benefited from the bonus program, taking share rights which provide the holder with the economic benefits of the stock, company registration documents show.

All 20, along with Ma, are members of the Alibaba Partnership, the 27-member group which will have the exclusive right to nominate a majority of Alibaba's board of directors, documents show.

A bonus scheme granting employees at a listed company shares in an unlisted affiliate doesn't raise any legal concerns, but it is unusual for a firm to allow an executive to independently determine compensation, corporate governance experts say.   Continued...

 
An employee is seen behind a glass wall with the logo of Alibaba at the company's headquarters on the outskirts of Hangzhou, Zhejiang province, April 23, 2014.  REUTERS/Chance Chan