NEW ORIENTAL(EDU)2020-09-16 20:06Executive Compensation and Benefits - For the fiscal year ended May 31, 2020, the company paid approximately US106,000 to pension insurance, medical insurance, housing fund, unemployment, and other benefits for executive officers and non-executive directors[554]. - The company has entered into employment agreements with executive officers, allowing termination for cause without notice or remuneration[551]. - Each executive officer is required to maintain confidentiality regarding the company's trade secrets and confidential information[553]. - The compensation committee is responsible for reviewing and approving the total compensation package for the chief executive officer and other executive officers[573]. Share Incentive Plans - The 2006 Share Incentive Plan allows for a maximum of 8,000,000 shares to be issued, with additional shares added annually since 2007[555]. - The 2006 plan expired in January 2016, and no additional awards may be granted under this plan[556]. - The company has a vesting schedule where one-sixth of the common shares underlying an option will vest every six months[562]. - The exercise price of options under the 2006 plan may be fixed or variable, determined by the plan administrator[561]. - The 2016 Share Incentive Plan allows for the issuance of up to 10,000,000 shares, with 1,256,505 non-vested equity shares outstanding as of May 31, 2020[563]. - The company amended its 2006 share incentive plan in September 2012, allowing the administrator to reduce the exercise price of outstanding options without shareholder approval, provided it does not incur significant additional share-based compensation expenses[708]. - The company adopted its 2016 share incentive plan in January 2016, following home country practice and obtaining board approval without requiring shareholder approval[708]. Board of Directors and Governance - The company’s independent directors include notable figures such as Robin Yanhong Li, co-founder of Baidu, and Denny Lee, former CFO of NetEase[548][549]. - The company’s executive team includes experienced professionals with backgrounds in finance, education, and technology[543][544][545]. - The board of directors consists of six members, including three independent directors, complying with NYSE requirements for independent oversight[569]. - The audit committee held meetings or passed resolutions 14 times in the fiscal year ended May 31, 2020, ensuring oversight of financial reporting processes[572]. - The nominating and corporate governance committee is tasked with selecting nominees for the board and ensuring compliance with corporate governance standards[574]. - The company has a board of directors consisting of three independent directors and three executive officers, maintaining independent audit, compensation, and governance committees[707]. - The company has no significant differences in corporate governance practices compared to domestic listed companies as per NYSE requirements[709]. Financial Performance and Position - The company reported a net income of 1.05 billion in 2019, a decrease of approximately 3%[730]. - Total assets increased from 6.56 billion in 2020, representing a growth of approximately 64%[738]. - Cash and cash equivalents decreased from 915.06 million in 2020, a decline of about 35%[738]. - Short-term investments rose significantly from 2.32 billion in 2020, an increase of approximately 39%[738]. - Total liabilities increased from US3,687,074 in 2020, representing a growth of 108.5%[740]. - Total equity rose from US2,869,811 in 2020, an increase of 43%[742]. - Retained earnings grew significantly from US1,986,411 in 2020, reflecting a rise of 46.8%[742]. - Additional paid-in capital increased from US456,088 in 2020, marking a growth of 253.5%[742]. Legal and Regulatory Matters - The company has been involved in a putative securities class action lawsuit, with ongoing proceedings related to allegations of material misstatements in public filings[596]. - The lease agreements with Metropolis Holding were approved by all directors, including disinterested directors, ensuring compliance with related party transaction regulations[589]. - The company has not entered into any material contracts outside the ordinary course of business, except those described in the annual report[644]. - Under Cayman Islands law, the company is not required to hold annual shareholders meetings every year, and it did not hold one in the fiscal year of 2020[709]. Taxation and Financial Reporting - There are no taxes levied on profits, income, or gains in the Cayman Islands, and no inheritance tax or estate duty applies[647]. - The company may be classified as a "resident enterprise" under PRC tax law if it meets specific criteria, which could subject dividends to a 10% withholding tax[649]. - The company does not intend to determine earnings and profits based on U.S. federal income tax principles, and distributions will generally be reported as dividends[656]. - The company maintained effective internal control over financial reporting as of May 31, 2020, as confirmed by an independent audit[692]. - The company adopted new accounting standards for leases in 2020, impacting the financial reporting of operating lease liabilities[731]. Risk Management - The company has not been exposed to material risks due to changes in interest rates, but a hypothetical one percentage point decrease in interest rates would have resulted in a decrease of approximately US$33.6 million in interest income for the year ended May 31, 2020[675]. - All revenues and most expenses are denominated in RMB, with exposure to foreign exchange risk primarily related to cash and cash equivalents denominated in U.S. dollars[676]. - The company does not believe it currently has any significant direct foreign exchange risk and has not hedged exposures denominated in foreign currencies[676]. - The conversion of Renminbi into foreign currencies is based on rates set by the People's Bank of China, and fluctuations in the exchange rate can significantly impact the value of investments[677].