Yesterday was not a good day for Chinese securities firm Guotai Junan. It was ‘unable to contact’ its chairman and CEO Yim Fung and its stock plunged by 12 throughout the course of the day – at one point is was down 17%.
It was initially unclear exactly why Yim cannot be contacted. But the market didn’t take it well. Towards later of the day, Chinese media was reporting that Yim was taken away to assist the investigation of Yao Gang, the former deputy head of the China Securities Regulatory Commission who has been probed for graft since 13th November.
Share price plunge of this magnitude usually deal a much bigger blow to senior executives than ordinary rank and file employees, because a large chunk of their compensation is awarded in the form of deferred shares.
So, after a day of 12% drop, what’s the paper loss for Guotai Junan’s senior executives? Based on the disclosure from the firm’s latest annual report, and taking into account the share price drop of 0.41 HK$ today, here is a rough calculation of the paper wealth loss for board of directors at Guotai Junan:
Of course, this is only a ‘paper’ loss of the directors’ wealth. As long as the shares are not traded, this loss will not be realized.