Hand Back Your Bonuses and Commissions, Evergrande’s Ex-Employees Told

Returned money expected to address gaps in Evergrande Wealth’s repayment obligations

Evergrande Center building in Shanghai on Sept. 22, 2021.

China Evergrande Group has demanded that current and former managers return part of their salaries and bonuses. Employees at its wealth management arm are to return commissions tied to the unit’s wealth management products.

The monies must be received by Saturday Nov. 30, a move likely to address the funding gaps in Evergrande Wealth’s repayment obligations, according to a person close to the company.

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Last year, Chinese police arrested some of Evergrande Wealth staff and launched a criminal investigation after the company had failed to repay investors in its wealth management products since September 2021. Authorities said Evergrande Wealth was suspected of illegal fundraising.

Evergrande Wealth had outstanding obligations totaling approximately 41 billion yuan ($5.66 billion) by the end of 2021, according to a company statement released in 2023. Despite prioritizing payments initially, by August 2023 the company said it could no longer meet obligations, leaving more than 30 billion yuan unpaid.

A former employee told Caixin that since Evergrande’s financial difficulties became public in the third quarter of 2021, the company has focused on ensuring unfinished property projects are delivered, but now its funding is near exhaustion.

According to a source close to the company, managers from 2017 to 2021 have been asked to return 15% of their salaries and bonuses. A dedicated bank account has been set up by police to receive these repayments.

Evergrande, which for most of the past decade was the country’s largest developer by sales, has been mired in a liquidity crisis since 2021. In January this year, a court in Hong Kong ordered its liquidation after it failed to come up with a debt restructuring plan agreeable to offshore bond holders.

Evergrande Wealth, formerly Evergrande Financial Service, was launched in 2015 as a peer-to-peer platform during a boom in P2P lending across China After a wave of industry collapses starting in 2018, the company rebranded itself in 2019, but continued selling wealth management products with annual returns of 7% to 10%.

Internally, Evergrande imposed group-wide sales targets, linking bonuses to the sale of its wealth management products. To meet the sales targets, many employees invested significant personal funds to buy the products. Many have yet to recover their principal amounts, leaving some unwilling to return previously earned commissions, a former employee told Caixin.

One former employee said that while the company had not yet enforced refunds, verbal warnings to employees have been issued hinting at consequences for non-compliance.