Chapter 440: You Can't Get Rich on a Salary

It can be said that the success of "Black Coal, Thin Ice" greatly enhanced Yutu Company's reputation, and directors who specialize in art films are also gravitating toward Yutu.

For example, "Twelve Citizens" and "The Master" have also leaned this way.

In any case, Yutu has money now, and investing in art films isn't expensive—if one hits, you make a killing.

If it doesn't hit, consider it buying reputation and depth.

Recently, the filming of "Gravity" is proceeding step by step, and Fang Hong doesn't need to supervise on set at all times.

Most of the content is being shot by Guo Fan.

Fang Hong only needs to control the artistic quality—checking how it differs from what he saw in his previous life and forming comparisons.

This is his biggest advantage in filmmaking: having a comparison. If he can improve it, he improves it; if he can't, he imitates the original version.

In any case, imitation is never wrong—after all, the original was successful, and his team is now professional enough to imitate it well.

After the new year, Yutu Company underwent another major organizational adjustment. Fang Hong issued thirty million in Option Stock, limiting each person to a maximum purchase of 500,000 shares, benefiting 60 people.

These 60 people became Shareholders of the company, including middle management and professional technical staff from various departments.

Visual effects and Animation Department technicians were the most numerous and received the most shares, while middle management was few—only twenty or thirty people. The rest were individuals in skilled technical trades.

All these people would buy their full allocation; those who couldn't would hold onto it.

Because they were told that next year one share would be worth three to five yuan, meaning 500,000 shares in dividends would let them casually earn over a million lying down.

If the company performs well, they could earn over two million, and after working a few years, over ten million.

Of course, except for those who already had share entitlements, others had to buy at one yuan per share—just a nominal gesture.

Those with entitlements received them free, but their share entitlements would be reclaimed; from then on, they wouldn't receive shares but options instead.

This approach is fairer, avoiding situations where people say this film has too long a production cycle so they won't shoot it, or that TV drama has too large an investment so they fear losses and won't shoot it.

Being picky and choosy isn't good for Yutu's development.

Now it's unified under the Option Pool—when the company makes money, those who get options make money too. Simple and clear.

Of course, some complained: "Everything was fine, why change things up like this?"

Some people simply don't like change—that's normal, reform always comes with growing pains. But since word was let out early, there weren't many complainers.

Many still trusted the Principal, after all, the Principal was genuinely giving them money.

It was also stated that dividends would be distributed based on company performance, and unless one chose to sell or resigned, the company would reclaim the shares.

Resignation requires reclamation—it's impossible to let holders take their shares from the Option Pool with them. The original purpose of issuing such shares was to retain talent, to keep them working for the company.

Taking shares requires signing an agreement not to leave the company for three years before receiving the entitlement; otherwise, if someone leaves right after receiving shares, that would be a huge loss.

Company employees had no particular reaction to the option dividends—after all, they hadn't actually received any money yet; that would only happen next year.

Still, many people's sense of belonging was strengthened.

With shares, no matter how you look at it, they're part of the company, a Shareholder of the company.

The decision to allocate 500,000 shares per person was made after careful consideration. Currently, film, TV, and Variety are all in continuous explosive growth.

Not to mention anything else, the New Year Slot and Spring Festival Slot alone have three films releasing, plus two TV dramas currently airing.

One is the satellite-online simulcast "The Heirs"; the other is the online-only "Soul Ferry."

Both are hits. "Soul Ferry" reached 250 million views in half a month—an astonishing achievement for the current era, considering this is a pure web drama.

Moreover, web dramas haven't matured yet; they're still in a developing era.

"Soul Ferry" scored 8.3 on Douban, attracting massive audiences with both its reputation and plot.

This drama generated forty million in revenue for Chang'e Video and brought in a large influx of paying users, pushing the paying user count past six million.

This was growth over two to three months—it surged sharply at first, then plateaued.

Audiences don't have that strong a paying habit yet. Those who will buy memberships will buy them; those who won't, won't no matter what.

Plus, many people only stay for one month and may or may not renew next month. On top of that, the VIP lock only lasts one day, so people can still freeload—they just have to watch more ads.

Right now, costs are still recovered through advertising.

Even so, this membership count puts Chang'e Video in the top tier in the current long-video field. Some competitors don't even have as many members as Chang'e Video, like Tencent.

In other words, every video Yutu produces generates revenue—the question is just how much. Last year, Yutu's revenue was 2.37 billion yuan, with net profit reaching 897 million.

This combined revenue came from films, TV, licensing, artist management, Best Special Effects, etc. Among these, artist management contributed 350 million, accounting for one-seventh.

After all, they still have to pay the artists, package them, and buy them Publicity Drafts and the like.

Most of it came from Zhao Xiaodao and Chen Xiaozhuan; the commercial value of other artists hadn't been developed.

The real money was still in film and TV licensing—content is king, it's just that licensing doesn't return funds as quickly as artist management.

In other words, after working to the bone and deducting costs, they made nearly 900 million—and this was without doing anything special.

Compared to those in internet or gaming, who casually make tens of billions, they're not even in the same league—falling far short of the Zhong family.

And this was the result of Fang Hong's four years of effort.

But it's also normal—Yutu's labor costs are too high. They employ so many people; film and TV production is inherently a labor-intensive industry, with a crew casually numbering over a hundred. The Zhong family is just a shell company, and the internet is just coding that can be automated—it's a completely different matter.

Besides high administrative costs, tax exemptions have also expired. After all, Yutu has been established for four or five years; it can't keep getting exemptions forever.

Most importantly, animation costs are high. Last year alone, they invested 200 million, totaling four to five hundred million over nearly three years.

That's the real money-burning monster—constantly burning cash. This year they still need to invest another 100 million. Absolutely terrifying.

However, they've also developed many advanced technologies, such as 3D modeling and rendering, recognizing characters' emotional states, and Motion Capture converted into digital data.

That is, capturing real actors' movements and converting them into digital characters.

This time, "Gravity" received technical support from the animation team—after all, it's entirely without physical sets; everything must be rendered.

So it's not without any return.

Profits are after costs are deducted. Shareholder dividends are distributed at 40% of profits, with 60% used for development.

That means out of 897 million, 358.8 million is distributed to Shareholders. CFO Meng Jun, holding 3% shares, received 10.76 million; Chen Zhixi received 21.52 million.

Yutu distributes a lot of profit because the company is stable—unlike Chang'e Technology.

Of course, the salary isn't high—it's still a million-yuan annual salary.

Chen Zhixi received a larger share because her equity was adjusted to 6%, up from 3%; she reclaimed her shares in the film and television company, and now her distribution is based on the entire group's performance, with no discrimination.

After all, she has followed Fang Hong for so many years, diligently managing affairs all this time; giving her a larger share is only fair.

"Oh come on, when will the Principal raise my salary?" Chen Zhixi joked after receiving this dividend.

If her salary went up, she'd take even more.

"Raise your salary? Have you ever seen anyone get rich from a salary?" Fang Hong spoke with solid reasoning.

Chen Zhixi smiled; she was just joking.

Indeed, in this society, very few people get rich from salaries—everyone gets rich through entrepreneurship and dividends; every company is the same, relying entirely on dividends.

And major bosses rarely pay themselves much in salary.

Those who pay themselves hundreds of millions in salary are the ones trying to drain the company dry—since it's all financing money, shareholders' money, they can't just take it directly into their pockets, so they instead pay themselves a salary of hundreds of millions.

People like that have no intention of running the business well; those who truly want to run it well never set their salaries too high.

Tony Ma's salary in 2017 was just over twenty million.

His company was huge, his enterprise impressive, yet his salary was only that high.

But his income was far more than that—he also received dividends, which were truly the main source, and dividends are never disclosed, hidden behind the scenes.

Aside from Chen Zhixi, everyone else's equity will remain unchanged for now.

In addition to these adjustments, Fang Hong issued eight million shares to the Producers and Directors.

The three Producers—Han Jia_nv, Tian Tian, and Zheng Jianfeng—each received one million shares, totaling three million shares.

Giving them shares gives them a sense of belonging.

Of course, the producer's share per film remains unchanged at 3%; that won't change.

High-level talent deserves high-level treatment; that's normal.

After all, a film's success or failure rests squarely on the Producer's shoulders—if you don't give them shares, their drive will fade.

As long as the company makes money, whether one film profits or not doesn't matter—that's the mindset.

Additionally, Lu Yang, Chen Sicheng, Wang Ran, Guo Fan, and Wen Muye each received one million restricted shares.

They are bound to Yutu to make films for Yutu; again, their share percentages remain unchanged.

Of course, they must each pay one yuan to buy them—that's eight million yuan total going to the company; it's the rule—if everything were free, the company would lose money.

And they all have the money—they can each afford one million; if they can't, they borrow from relatives or ask their wives.

With this adjustment, everything is far more reasonable now.

It has stirred everyone's enthusiasm and given them a sense of belonging.

As for the Literary Association's shares, those remain untouched for now.

Of course, in the future, Fang Hong will still distribute money to those at the bottom, striving to make more people prosperous.

But now Yutu must also expand—it just spent three hundred million to acquire Mahua FunAge, and further acquisitions and cinema purchases are coming.

Fang Hong remembers that after this meeting, higher authorities will gradually lift restrictions on capital entering cinemas—capital will be allowed to invest in building cinemas, with far fewer limitations.

The next few years will be the era of capital merging with cinemas.

Now that we have some money, we must find ways to deploy it; investment and mergers are an unavoidable path.

If you don't move, BAT will.

Since we don't yet know how, let's first donate fifty million to Beijing Film Academy for talent cultivation and new campus construction.

Otherwise, the Yutu Film and Television Base in Huairou New City is too isolated in the remote wilderness.

(End of Chapter)