People

The People

Yatsen earns a C+ on governance: deep founder skin-in-the-game and a credible audit chair, dragged down by a 20:1 dual-class structure that hands the founder 90.7% voting power [1], an expanding ledger of related-party purchases (now ¥372M / 9% of revenue), and a March 2026 ~$120M convertible-plus-warrants struck with a vehicle affiliated with the CEO [2].

Governance Grade

C+

Skin-in-Game (1-10)

CEO Voting Power

90.7%

CEO Economic Stake

34.3%

The People Running This Company

Five names matter. The founder still runs the show; the CFO is a US-capital-markets veteran; the CSO is the technical credential the brand needs. Roster, ages, and committee assignments below are from the most recent [3] plus the [4] reporting the board change.

No Results

The credentials are real, not cosmetic. Yang spent nine years as CFO of a much larger NYSE-listed Chinese consumer business (Vipshop) and was added to the XPeng board the same month he joined Yatsen — he is the bridge between Guangzhou operations and Wall Street capital. Cheng's Estée Lauder pedigree is the kind of hire a brand needs when the pitch is "science-backed Chinese beauty" — she sat as VP APAC R&D at the world's largest skincare house before joining in 2023. Zhang is the strongest independent: a former Deloitte SEC-services partner now running finance at one of China's defining internet companies, and she chairs both the audit and compensation committees.

The new wrinkle: Sidney Xuande Huang (no relation, unrelated independent) resigned on February 28, 2026 "for personal reasons" and Alan Hao Zong was seated the same day, with Bonnie Yi Zhang re-designated as audit chairwoman [5]. Same-day swaps deserve a raised eyebrow. Zong's CV — Alibaba Investment, Capital Today, P&G — looks investor-class, but he is brand-new and unproven on this board.

Foreign Private Issuer caveat: Yatsen files Form 20-F, not 10-K. No DEF 14A. No Form 4 / Section 16. Insider trades are disclosed annually in Item 7, not in real time. The Nasdaq "Insider Activity" page literally returns "Data is currently not available" because the SEC exempts FPIs from these filings.

What They Get Paid

Cash compensation is unusually small for a NYSE-listed company. The story is told in equity grants and trust transfers, not paychecks.

No Results

For perspective: the CEO of a NYSE-listed beauty company globally earns $5-50M per year in total comp. Yatsen pays its entire executive team a combined ¥7.5M (~$1.1M) in cash [6]. This is either a discipline signal — Huang owns 34% of the equity and 90% of the votes, so he gets paid via the share price, not the paycheck — or a sign that base salaries have been deliberately suppressed to make the equity story cleaner. Either way, there is no Disney-style golden parachute to fund here.

Equity is the real number, and even there ¥59M ($8.4M) of SBC is modest against ¥4.3B of revenue (~1.4%). Outstanding options on directors/executives total only 14.8M ordinary shares — roughly 0.74M ADRs at the 20:1 ratio. The dilution overhang from the named executive option grants is trivial in ADR terms.

The administrator problem: Mr. Huang himself is named administrator of both the 2018 and 2022 Share Incentive Plans [7]. Best practice is that the compensation committee — not the CEO — sets grants. The 20-F language carves out a fallback to the comp committee "in the event that Mr. Jinfeng Huang is unable to carry out his duties or in the event of conflict of interest," but the default is that the CEO grants himself and his team equity. For a controlled company this is not a violation; it is, however, the textbook example of what the comp committee exists to prevent.

Are They Aligned?

This is the central question. Yatsen has every formal marker of alignment — heavy insider economics, an aggressive buyback program, modest cash pay — and several real concerns underneath them.

Ownership and voting control

No Results

The gap is the whole story. Huang owns 34% of the equity but casts 91% of the votes; the public float owns 35% of the equity but casts 5% of the votes. Hillhouse — Yatsen's anchor pre-IPO investor and a sophisticated $100B+ Asia fund — holds 13.8% economic for just 1.9% voting power [8]. Any shareholder revolt would require the CEO to vote against himself. He will not.

This structure is legal — every Chinese ADR with a founder uses some variant — but the multiplier matters: at 20 votes per Class B share [9], Yatsen's super-voting ratio is in the high tier (Alibaba uses partnership voting; JD uses 20:1; Meituan 10:1). The 91% voting share means proxy contests, take-private offers, board removals, and amendment votes are not a real check.

ADRs outstanding peaked at 126.3M post-IPO (2020-21) and have been bought back to 93.9M (2025) — a roughly 26% net reduction in ADRs over four years, financed by ~$1.9B of cumulative repurchases (program authorized [10], then upsized to US$150M in [11] and to US$200M / November 2025 per the [12]). Few unprofitable companies return that much capital to shareholders. The catch: most of the buying happened at $5–$15 per ADR; the stock now trades around $3. The buybacks shrank the float meaningfully but destroyed substantial value at higher prices.

A second nuance: the ADS ratio itself was [13] (a 1-for-5 ADS reverse split). Historical ADR counts above are on the post-split basis.

The trust complication: 79.2M Class A ordinary shares are held through two trusts "for the benefit of employees, directors and officers" — these get released as service conditions vest. So the float-shrinking buybacks need to be netted against trust-based vesting. Yatsen reports SBC of only ¥59M in 2025, suggesting the trust drawdown is now small.

No Results

This is the line that moves alignment from good to mixed. Purchases from "companies over which we exercise significant control" have risen ¥211M → ¥285M → ¥372M ($53M) over three years [14]. The 20-F also references RMB 20.1M of sales (since wound to zero) to a separate "company controlled by our chief executive officer." The counterparty identified back in the IPO filings was Shanghai Minglei Trading Co., Ltd., in which the Group reported a 25% equity stake and the power to appoint a director [15]. The line items are growing, the disclosures are thin, and no third-party fairness opinion is mentioned.

The Trustar convertible — the single most material event of 2026

On March 11, 2026, Yatsen signed a Note Purchase Agreement with "a purchaser affiliated with Trustar Capital and Mr. Jinfeng Huang, our founder, chairman of the board of directors and chief executive officer." Approximately $120M of RMB-denominated convertible senior notes plus warrants, issued in two equal tranches [16]. The first tranche closed in May 2026 after Hillhouse joined the purchaser vehicle as co-investor [17].

A convertible-plus-warrant package, struck with a vehicle the CEO himself is affiliated with, is the textbook self-dealing fact pattern audit committees exist to police. The audit committee chair (Bonnie Yi Zhang) is genuinely qualified and the transaction was disclosed — those are mitigants. The full deal economics are in the [18]: 1.5% coupon paid semi-annually, conversion price $4.63 per Class A ordinary share (≈ $92.60 per ADS at the 20:1 ratio — well above the current ~$3 ADR price), warrants for 1/10 the converted-share count at $0.50 per Class A share (≈ $10 per ADS), a 4% IRR put on the third anniversary, and a 364-day-to-5-year maturity contingent on NDRC foreign-debt registration. On those terms the conversion is deeply out-of-the-money and the package reads more like a 1.5%/4% bond with an upside warrant than a sweetheart equity grant. The bigger flag is procedural: the 20-F discloses that "a significant shareholder of the Company objected to, and concerns regarding, the consummation of the transaction" and ultimately negotiated a seat in the purchaser vehicle — i.e., Hillhouse had to fight its way in. Independent fairness terms (the missing piece) are still not disclosed.

Skin-in-game score: 8/10

No Results

Net: 8/10. The founder has roughly $1.75B at risk at the current price and has funded a buyback program that materially shrinks the float. The deductions reflect the structural points: super-voting locks shareholders out of consequence, and the related-party + Trustar deals are the kind of "owner-friendly" capital allocation that doesn't always treat minority holders the same way.

Board Quality

Three independent directors, two insiders. Formally 60% independent. Three committees, all chaired by independents. The substance is better than the structure suggests.

No Results

The substantive grade is better than the dual-class voting suggests. Bonnie Yi Zhang is a genuinely strong audit committee chair — a former Deloitte partner specializing in SEC services for foreign private issuers is precisely the right CV for this seat, and she also chairs comp. Jiming Ha is an unusually senior independent voice for a $250M company: a former IMF economist, ex-Goldman Sachs Asia MD, and CICC chief economist would be a routine appointment at a large-cap, not a small-cap. The weakness is that with only three independents, the same people sit on every committee — the audit, compensation, and nominating committees are essentially the same three people in different rooms.

The CFO board-commitments question. Donghao Yang sits on three public-company boards simultaneously — Yatsen (where he is CFO), XPeng, and Vipshop. Two non-executive directorships is the typical limit recommended by governance services for a sitting CFO. This is at the edge of acceptable.

The Verdict

Governance grade: C+

Governance Grade

C+

The strongest positives

Real founder skin-in-the-game: ~$1.75B of personal equity at risk; cash compensation is rounding error against the equity position.
Buybacks have shrunk the share count by ~26% from peak, financed by $1.9B of cumulative repurchases. Few unprofitable companies have returned that much capital.
An audit committee chair (Bonnie Yi Zhang) whose CV — Deloitte SEC-services partner, then Weibo/Sina CFO — is the right credential for the seat. A nominating chair (Jiming Ha) of unusual seniority for a company this size.
Hillhouse stayed in. ZhenFund stayed in. Sophisticated long-term capital has not walked away.

The real concerns

20:1 super-voting Class B leaves the founder with 90.7% voting on 34.3% economics. Minority shareholders are along for the ride.
Related-party purchases growing from ¥211M → ¥285M → ¥372M with no disclosed independent fairness review.
The March 2026 $120M convertible-plus-warrants struck with a vehicle the CEO is affiliated with is the single most consequential governance event of the cycle.
CEO is the named administrator of both equity plans.
Same-day swap (Feb 28, 2026) of Sidney Xuande Huang for Alan Hao Zong with only "personal reasons" disclosed.
Foreign Private Issuer status removes Form 4 / Section 16 visibility into ongoing insider trades.

The single thing that would move the grade

Upgrade to B/B+: the audit committee discloses an independent fairness opinion on the Trustar convertible (the headline terms are in the [19]; what is still missing is third-party validation that the package was market-tested), and the related-party purchase line plateaus or shrinks in FY26.
Downgrade to C/C-: the related-party line keeps growing toward ¥500M+, or the CEO-affiliated convertible is repriced (lower conversion or lower warrant strike) on terms more favorable than what was available to outside holders.

References

Generated Jun 9, 2026 15:43 UTC