People

The People

Governance grade: C+. Yatsen is a founder-controlled Chinese ADR with a 91% voting lock held by one man, growing related-party purchases, and an active securities class action — but it is also genuinely shareholder-active, with a completed ¥1.46B share buyback program, a credible ex-JD/Sina/Goldman independent board, and a CEO who is putting roughly ¥834M of fresh personal capital into the business via a March 2026 convertible.

The People Running This Company

Six names matter. The first three run the company; the second three are the board's check on them.

No Results

**Founder.** David Huang built Yatsen at age 32, took it public on the NYSE at 36, and now — at 41 — is steering the second act after Perfect Diary's 2021 collapse. His Harvard MBA and three years inside P&G's marketing organization do show up in the brand-portfolio strategy; the share-class structure (see below) shows up in everything else.

**The CFO is the safety valve.** Donghao Yang ran the books at Vipshop ($14B+ NYSE-listed e-commerce) for nine years before joining in November 2020 — exactly when Yatsen IPO'd. He still sits on the boards of Vipshop and XPeng. For minority holders this matters: the most operationally seasoned senior figure is the CFO, not the founder, and his external directorships keep him in the U.S. capital-markets disclosure ecosystem.

What They Get Paid

Cash compensation is small, both in absolute terms and against revenue. Equity is where the alignment — and the dilution — actually lives.

Executive cash (FY24)

9.5

Executive benefits (FY24)

0.5

Independent director fees (FY24)

1.46

Total NEO comp / revenue

23.0%

No Results

The total options outstanding to directors and executives sum to 16.78M Class A shares — economically immaterial to the float, but the strike price tells the story. At US$0.025 per Class A share (US$0.50 per ADS), every grant is deeply in the money against the recent ~US$4 ADS price. These are not pay-for-performance options; they are restricted-stock-equivalent grants disguised as options for tax/structure reasons. That is fine — but it means independent directors are being paid in something that vests regardless of share-price performance.

The aggregate scale of the equity program is the more important number. Of the 249.2M shares authorized under the 2018 Share Option Plan, 219.3M (88%) had already been granted by the end of FY2024. The 2022 Share Incentive Plan layered on an evergreen mechanism: 1.5% of fully-diluted shares plus 1.5% annual top-up for the first two years and 1.0% per year thereafter. That is structural dilution every year for a decade.

**One person controls compensation.** The 2018 and 2022 share plan administrators are both — explicitly — **Mr. Jinfeng Huang**, the CEO. The compensation committee approves NEO pay, but plan-level grant decisions sit with the founder. There is no compensation consultant disclosed.

Are They Aligned?

This is the case. Yatsen's founder owns 35% of the economics and 91% of the votes. That is alignment of interest and concentration of power, sometimes simultaneously.

Ownership versus voting power

The chart is the story. Class B shares carry 20 votes each and only the founder holds them (600.6M Class B held through Slumdunk Holding, BVI). His 644M total ordinary shares — most of them Class B — give him a 91% lock. Hillhouse, ZhenFund and Banyan together own 33% of the equity but control just 4.7% of the vote. Minority holders cannot win a contested resolution.

Capital allocation behaviour

ADS count has fallen 31% since FY2018 (from 134.9M to 93.1M), driven by a multi-year ¥1.46B (~US$200M) repurchase program now described by management as completed. For a company with negative operating cash flow in 5 of the last 8 years, that is a meaningful capital-allocation choice — it traded balance-sheet flexibility for share-count compression. The ¥1.05B remaining cash and short-term investments at YE2025 (down from ¥5.7B at YE2020) is the receipt for that decision.

Insider activity

No Results

**The convertible deal is the alignment signal of the cycle.** In March 2026, Yatsen agreed to issue ~US$120M (≈¥834M) in convertible senior notes with attached warrants in two equal tranches to Trustar Capital and to **CEO Jinfeng Huang personally**. Founders rarely write personal cheques into the converts of their own listed company; when they do, it is the strongest available form of "I believe what I'm telling you" disclosure. Funds are earmarked for R&D, global logistics, international expansion and acquisitions.

There is no Section 16 paper trail (Yatsen is a Foreign Private Issuer — exempt from Form 4 filings), so the standard U.S. insider-trading database is empty. The only individual-level insider transaction in the record is a routine Form 144 in June 2025: an unnamed insider sold 100,000 ADS (≈US$966K, ≈¥6.9M) acquired through the incentive plan in February 2024. That is a vesting-related liquidity sale, not a directional signal.

Purchases of inventory and services from companies under Yatsen's "significant control" have doubled in two years — ¥137.5M → ¥285.5M — and now equal 8.3% of FY2024 revenue. The 20-F discloses these are reviewed by the audit committee and are interest-free, but provides no breakdown by counterparty, no pricing methodology disclosure, and no commentary on why the volume is rising while overall revenue is flat. Separately, Yatsen sells inventory to "a company controlled by our chief executive officer," with the receivable balance from that entity sitting at ¥5.1M at YE2024. None of these numbers are individually large; the trend is what merits attention.

Skin-in-the-game score

Skin-in-the-game (1–10)

A 6, not an 8. The founder's 35% economic stake and his March 2026 convertible cheque are unambiguously aligning. Working against that score: the 20-vote Class B share class neutralises shareholder dissent, the 2022 evergreen plan dilutes minority holders by 1.0–1.5% per year for a decade, related-party purchases are growing, and an unresolved IPO-era class action (see Board Quality below) hangs over the record.

Board Quality

Five directors. Two insiders (Huang, Yang). Three independent. Each independent director chairs one committee, and each is — individually — a credible appointment.

No Results

The independent slate is unusually strong for a company at this market-cap (US$268M / ¥1.95B). Sidney Xuande Huang ran finance at JD.com through its full scaling and US listing era; Bonnie Zhang is an active sitting CFO (Sina) and audit-partner alumna; Dr. Jiming Ha brought 13 years of IMF and Goldman Sachs Asia investment-banking judgment. Two of the three are designated audit-committee financial experts, which is one more than the NYSE minimum.

**Combined Chair/CEO with no lead independent director disclosed.** Founder David Huang holds both the Chair and CEO titles, and the proxy does not name a lead independent director. With independent directors chairing all three committees this is partly mitigated, but on a contested governance matter the board structure does not contain a built-in counterweight to the executive.

**Where the board is thin.** Nobody on the board is a beauty-industry operator. CSO Jing Cheng (ex-Estée Lauder VP APAC R&D) is the deepest cosmetics-industry executive in the building, and she is not a director. For a company that just shifted its centre of gravity from color cosmetics to skincare/biotech, the absence of an independent industry voice on the board is a real gap — particularly given that brand strategy and M&A allocation are the two decisions most likely to shape the next five years.

**Unresolved class action.** A federal securities class action (Levi & Korsinsky, lead) was filed covering the period from the November 2020 IPO through March 10, 2022, alleging that the registration statement and prospectus misrepresented the health of Perfect Diary and Little Ondine sales. The case post-dates the current independent slate's appointment (all three joined Nov 2020 / March 2021), and the Yatsen 20-F does not disclose a settlement or judgment. The contingent liability is not quantified in the financials.

The Verdict

Governance grade

C+

Skin-in-the-game (1–10)

**What works.** Founder owns 35% of the economics and is putting US$60M (≈¥417M) of personal money into the March 2026 convertible. The independent slate (ex-CFOs of JD.com and Sina, plus a Goldman/IMF veteran) is materially stronger than the company's market cap would predict. The ¥1.46B (~US$200M) buyback program retired ~31% of ADS over seven years. Cash compensation is genuinely modest at ~¥10M. The CFO has nine years of NYSE-listed China-ADR experience.

**What concerns.** The 20-vote Class B class gives one person 91% of the vote in perpetuity — minority holders have no contested-vote leverage. Related-party purchases doubled in two years to 8.3% of revenue with no pricing-methodology disclosure. The 2018 plan is 88% exhausted and the 2022 plan is structurally dilutive (1.0–1.5% per year for a decade). The CEO is plan administrator for both equity programs. An unresolved 2022 securities class action remains an unquantified contingent liability.

The single fact that would most change this grade is the outcome of the related-party trend. If FY2025 RPT purchases stabilise or shrink and the audit committee discloses a pricing-methodology framework, Yatsen migrates to a B / B+. If the FY2025 20-F shows another 30%+ jump in related-party volume — or any revelation that the convertible warrants meaningfully widen the founder's already-locked voting position — the grade falls to a C / C-.