Great Wall Motor : Proposed Adoption of the Revised Restricted A Share and A Share Option Incentive Scheme

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長 城 汽 車 股 份 有 限 公 司

GREAT WALL MOTOR COMPANY LIMITED*

(A joint stock company incorporated in the People's Republic of China with limited liability)

(Stock code: 2333)

Announcement

Proposed Adoption of the Revised Restricted A Share and

A Share Option Incentive Scheme

PROPOSED ADOPTION OF THE REVISED INCENTIVE SCHEME

Due to rearrangement of positions of the Company's personnel, the Company has made revisions to the number of the Participants and the total number of shares to be granted under the 2019 Incentive Scheme of Restricted Shares and Share Options as well as the appraisal method and matters relating to the authorization to the Board.

GENERAL

An extraordinary general meeting and class meetings of the Company will be held on 25 October 2019 to consider and approve, amongst other things, proposed adoption of the revised Restricted A Share and A Share Option Incentive Scheme by the Shareholders. The Company will dispatch the revised notice of the extraordinary general meeting, the revised notice of the class meetings to the Shareholders on 27 September 2019 and dispatch the circular containing further details of the terms of the revised Restricted A Share and A Share Option Incentive Scheme and details of the relevant revisions to the Shareholders no later than 10 October 2019 in accordance with the requirements under the Hong Kong Listing Rules and the Articles of Association.

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Reference is made to the announcement of Great Wall Motor Company Limited (the "Company" or "Great Wall Motor") dated 6 September 2019, in relation to the proposed adoption of the Restricted A Share and A Share Option Incentive Scheme (the "Announcement"). Unless otherwise defined, capitalized terms used in this announcement shall have the same meanings as those defined in the Announcement.

Due to rearrangement of positions of the Company's personnel, the Company has made revisions to the number of the Participants and the total number of shares to be granted under the 2019 Incentive Scheme of Restricted Shares and Share Options. The major revisions are as follows:

1. REVISIONS TO THE NUMBER OF THE PARTICIPANTS AND THE TOTAL NUMBER OF SHARES TO BE GRANTED
   Under the original Incentive Scheme, there are 1,928 Participants (of which 306 are Participants for Restricted Shares and 1,622 are Participants for Share Options) and 185,091,300 Shares to be granted, representing 2.028% of the total share capital of the Company (of which 73,682,400 are Restricted Shares to be granted to the Participants, representing 0.807% of the total share capital of the Company, and 111,408,900 are Share Options to be granted to the Participants, representing 1.221% of the total share capital of the Company).
   Under the revised Incentive Scheme, there are 1,915 Participants (of which 303 are Participants for Restricted Shares and 1,612 are Participants for Share Options) and 184,041,600 Shares to be granted, representing 2.016% of the total share capital of the Company (of which 73,297,600 are Restricted Shares to be granted to the Participants, representing 0.803% of the total share capital of the Company, and 110,744,000 are Share Options to be granted to the Participants, representing 1.213% of the total share capital of the Company).

There is a decrease of 13 Participants after the revision as compared to the original Incentive Scheme with no additional Participants.

1. Revised Restricted Shares Incentive Scheme

1. Number of the shares

The Company intends to grant 73,297,600 Restricted Shares to the Participants, representing 0.803% of the total number of Shares of the Company (i.e. 9,127,269,000 Shares) as at the date of the announcement of the draft of the Incentive Scheme, of which 58,638,100 Restricted Shares will be granted under the first grant, representing 80% of the total number of Restricted Shares may be granted under the Incentive Scheme and 0.642% of the total number of Shares of the Company (i.e. 9,127,269,000 Shares) as at the date of the announcement of the draft of the Incentive Scheme; and 14,659,500 Restricted Shares will be reserved, representing 20% of the total number of Restricted Shares may be granted under the Incentive Scheme and 0.161% of the total number of Shares of the Company (i.e. 9,127,269,000 Shares) as at the date of the announcement of the draft of the Incentive Scheme.

The total funds to be raised from the first grant of the Restricted Shares are estimated to be approximately RMB241,589,000. These proceeds are intended to be used as the general working capital of the Company.

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(2) Allocation

				Percentage
			Number of	to the total	Percentage to
			the Restricted	number of	the current
			Shares granted	the Restricted	total number
Name		Position	(0' 000 shares)	Shares granted	of Share
Wang Feng Ying*		Vice Chairman,
		Executive Director,	330	4.50%	0.036%
		General Manager
Hu Shu Jie		Deputy General	200	2.73%	0.022%
		Manager
Zhao Guo Qing		Deputy General	138	1.88%	0.015%
		Manager
Xu Hui		Board Secretary	43	0.59%	0.005%
Liu Yu Xin		Chief Financial	25	0.34%	0.003%
		Controller
Zheng Chun Lai*		Director of
		subsidiaries,	40	0.55%	0.004%
		General Manager
Zhang De Hui*		Director of
		subsidiaries,	40	0.55%	0.004%
		General Manager
Li Rui Feng*		Director of
		subsidiaries,	126	1.72%	0.014%
		General Manager
Core management, core technical (business)	4,921.81	67.15%	0.539%
backbone staff (295 people)
Reserved Grant	1,465.95	20%	0.161%
	Total	7,329.76	-	0.803%

• The grantor of connected persons: Director of the Company, Director or General Manager of the Company's subsidiaries

2. Revised Share Option Incentive Scheme

1. Number of the shares

The Company intends to grant 110,744,000 Share Options to the Participants, representing approximately 1.213% of the total number of Shares of the Company (i.e. 9,127,269,000 Shares) as at the date of the announcement of the draft of the Incentive Scheme, of which 88,595,200 Share Options will be granted under the first grant, representing 80% of the total number of Share Options may be granted under the Incentive Scheme and approximately 0.971% of the total number of Shares of the Company (i.e. 9,127,269,000 Shares) as at the date of the announcement of the draft of the Incentive Scheme; and 22,148,800 Share Options will be reserved, representing 20% of the total number of Share Options may be granted under the Incentive Scheme and approximately 0.243% of the total number of Shares of the Company (i.e. 9,127,269,000 Shares) as at the date of the announcement of the draft of the Incentive Scheme. Each share option has the right to purchase one ordinary A share at the Exercise Price within the validity period, subject to the exercise conditions.

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(2) Allocation

		Percentage
	Number of	to the total
	shares subject	number of
	to the Share	shares subject	Percentage to
	Options to be	to the Share	the current
	granted	Options to be	total number of
Position	(0' 000 shares)	granted	Shares
Core management, core technical (business)
backbone staff (1,612 people)	8,859.52	80%	0.971%
Reserved Grant	2,214.88	20%	0.243%
Total	11,074.40	-	1.213%

(II) REVISIONS TO THE MEASUREMENT OF IMPACT ON THE PERFORMANCE

1. Restricted Shares

Assuming the first grant of Restricted Shares takes place in November 2019, based on the data on 5 September 2019, the total amount of fair value of the equity instruments first granted by the Company to the Participants in the original Incentive Scheme is RMB236,962,500, while such amount is RMB235,725,200 upon revision.

In the original Incentive Scheme, the total cost of 58,945,900 Restricted Shares first granted under the Scheme is RMB236,962,500 and amortized over 48 months after the grant date, details of which are set out below:

Unit: 0' 000 Currency: RMB

Number of Restricted	Total
Shares under the first	cost to be
grant (0' 000 shares)	amortized	2019	2020	2021	2022
5,894.59	23,696.25	2,830.39	15,007.62	4,541.78	1,316.46

In the revised Incentive Scheme, the total cost of 58,638,100 Restricted Shares first granted under the Scheme is RMB235,725,200 and amortized over 48 months after the grant date, details of which are set out below:

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Unit: 0' 000 Currency: RMB

Number of Restricted	Total
Shares under the first	cost to be
grant (0' 000 shares)	amortized	2019	2020	2021	2022
5,863.81	23,572.52	2,815.61	14,929.26	4,518.07	1,309.58

2. Share Options

In the original Incentive Scheme:

Assuming the first grant of Share Options takes place in November 2019, the Company uses the "Black-Scholes" model to measure the fair value of the Share Options and estimates the fair value of 89,127,100 Share Options first granted by the Company using such model on 5 September 2019. The theoretical value of 89,127,100 Share Options first granted by the Company is RMB126,935,000. The value of the Options in each exercise period is as follows:

			Currency: RMB
			Total value
	Number of		of the Options
	Options under		under the
	the first grant	Value per	first grant
Exercise period	(0' 000)	Option (RMB)	(RMB0' 000)
First exercise period	2,970.90	1.29	3,841.29
Second exercise period	2,970.90	1.41	4,182.60
Third exercise period	2,970.91	1.57	4,669.61

Selection of specific parameters is as follows:

1. Current price of subject shares: RMB8.14 per share (assuming the closing price of shares on 5 September 2019 is the current price of shares as at the grant date);
2. Exercise Price of the Share Options: RMB8.23 per share as determined under the Management Measures;
3. Valid period: one, two and three years, respectively (based on the period commencing from the grant date and ending on the first exercise date for each respective period);
4. Historical volatility: 43.70%, 35.24% and 33.48%, respectively (the volatility of the Company for the latest one, two and three years before the announcement, respectively; source: Wind database);

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1. Risk-freerate: 2.61%, 2.71% and 2.76%, respectively (the yield of PRC treasury bond for one, two and three years);
2. Dividend yield: 3.56% (the average dividend yield of the Company for the latest 12 months before the announcement of the Incentive Scheme).

In the revised Incentive Scheme:

Assuming the first grant of Share Options takes place in November 2019, the Company uses the "Black-Scholes" model to measure the fair value of the Share Options and estimates the fair value of 88,595,200 Share Options first granted by the Company using such model based on the data on 5 September 2019. The theoretical value of 88,595,200 Share Options first granted by the Company is RMB126,177,500. The value of the Options in each exercise period is as follows:

			Currency: RMB
			Total value
	Number of		of the Options
	Options under		under the
	the first grant	Value per	first grant
Exercise period	(0' 000)	Option (RMB)	(RMB0' 000)
First exercise period	2,953.17	1.29	3,818.37
Second exercise period	2,953.17	1.41	4,157.64
Third exercise period	2,953.17	1.57	4,641.74

Selection of specific parameters is as follows:

1. Current price of subject shares: RMB8.14 per share (assuming the closing price of shares on 5 September 2019 is the current price of shares as at the grant date);
2. Exercise Price of the Share Options: RMB8.23 per share as determined under the Management Measures;
3. Valid period: one, two and three years, respectively (based on the period commencing from the grant date and ending on the first exercise date for each respective period);
4. Historical volatility: 43.70%, 35.24% and 33.48%, respectively (the volatility of the Company for the latest one, two and three years before the announcement, respectively; source: Wind database);

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1. Risk-freerate: 2.61%, 2.71% and 2.76%, respectively (the yield of PRC treasury bond for one, two and three years);
2. Dividend yield: 3.56% (the average dividend yield of the Company for the latest 12 months before the announcement of the Incentive Scheme).

Note: The calculation results of the value of the Share Options are subject to a number of assumptions of the parameters used herein and the limitation of the model adopted. Therefore, the estimated value of the Share Options may be subjective and uncertain.

In the original Incentive Scheme, the total cost of 89,127,100 Share Options first granted is RMB126,935,000 and amortized over 48 months after the grant date, details of which are set out below:

		Currency: RMB	Unit: 0' 000
Amortized cost of the
Share Options under
the first grant	2019	2020	2021	2022
12,693.50	1,248.19	6,848.92	3,299.29	1,297.11

In the revised Incentive Scheme, the total cost of 88,595,200 Share Options first granted is RMB126,177,500 and amortized over 48 months after the grant date, details of which are set out below:

		Currency: RMB	Unit: 0' 000
Amortized cost of the
Share Options under
the first grant	2019	2020	2021	2022
12,617.75	1,240.74	6,808.04	3,279.60	1,289.37

DIRECTORS' CONFIRMATION

The Directors (including the independent non-executive Directors) are of the view that the proposed adoption of the revised Share Option Incentive Scheme, the revised appraisal measures and the authorization to the Board are in the best interests of the Company and the Shareholders as a whole.

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GENERAL

An extraordinary general meeting and class meetings of the Company will be held on 25 October 2019 to consider and approve, amongst other things, proposed adoption of the revised Restricted A Share and A Share Option Incentive Scheme by the Shareholders. The Company will dispatch the revised notice of the extraordinary general meeting, the revised notice of the class meetings to the Shareholders on 27 September 2019 and dispatch the circular containing further details of the terms of the revised Restricted A Share and A Share Option Incentive Scheme to the Shareholders no later than 10 October 2019 in accordance with the requirements under the Hong Kong Listing Rules and the Articles of Association.

By order of the Board

Great Wall Motor Company Limited

Xu Hui

Company Secretary

Baoding, Hebei Province, the PRC, 27 September 2019

As at the date of this announcement, members of the Board comprise:

Executive Directors: Mr. Wei Jian Jun, Ms. Wang Feng Ying and Ms. Yang Zhi Juan.

Non-executive Director: Mr. He Ping.

Independent Non-executive Directors: Mr. Ma Li Hui, Mr. Li Wan Jun and Mr. Ng Chi Kit.

• For identification purpose only

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