- Li Auto granted HK$2.3 billion in stock incentives tied to market-cap milestones rather than tenure.
- Executives received 35 million options and 5.56 million RSUs that vest only as market value hits HK$200B–HK$1T.
- With current market cap ~HK$119.5B, Li Auto must grow over eightfold for all awards to fully vest.
On June 16, Li Auto announced in a filing with the HKEX that it had granted a new round of equity incentives to executives and employees, while also adjusting the long-term incentive mechanism for its core management team.
Unlike previous vesting structures that were primarily based on years of service, the new scheme closely ties incentives to the company’s market capitalization performance.
According to the filing, under its 2020 Share Incentive Plan, Li Auto granted a total of 35 million share options to Executive Director and CFO Li Tie, Executive Director and President Ma Donghui, and CTO Xie Yan, corresponding to 17.5 million American Depositary Shares (ADSs).
Based on the grant-date opening price of HK$ 56.85 ($7.26) per share, the options are valued at approximately HK$ 1.99 billion ($254 million), accounting for around 1.62% of the company’s total outstanding shares.
Of the total, Li Tie received 10 million share options, Ma Donghui received 15 million, and Xie Yan received 10 million.
In addition, the company granted 5.5572 million restricted stock units (RSUs), valued at approximately HK$ 316 million ($40.4 million).
Among them, Ma Donghui received 1.5 million RSUs, while the remaining 4.0572 million units were awarded to 99 employees.
Combined, the two incentive programs are valued at approximately HK$ 2.306 billion ($294 million). Of that amount, the combined value of Ma Donghui’s share options and RSUs alone totals approximately HK$ 938 million ($120 million).
However, the incentives are not immediately realizable. The options carry an exercise price of $14.38 per ADS, meaning full exercise would require payments totaling approximately $252 million.
In addition, the options adopt a phased vesting mechanism directly linked to Li Auto’s market capitalization.
Under the rules, 20% of the options vest when Li Auto’s market capitalization reaches HK$ 200 billion ($25.5 billion).
An additional 20% vests when market capitalization reaches HK$ 400 billion ($51.1 billion), HK$ 600 billion ($76.6 billion), and HK$ 800 billion ($102.2 billion), respectively.
The final 20% will vest only when the company’s market value reaches HK$ 1 trillion ($127.7 billion).
Li Auto said in the filing that the adjustment is intended to align the interests of its core management team with those of shareholders and the company’s long-term performance.
The changes come as Li Auto faces a period of operational pressure. Data show the company delivered 33,350 vehicles in May, down 18.3% year-on-year.
Of these, 20,878 units were the all-electric i6, which has surpassed 20,000 monthly deliveries for three consecutive months.
In the first quarter of this year, Li Auto reported revenue of RMB 23 billion ($3.39 billion), down 11.4% year-on-year, while net loss reached RMB 2.276 billion ($336 million), its largest quarterly loss since turning profitable in 2022.
As of publication, Li Auto’s Hong Kong-listed shares traded at HK$ 56.15 ($7.17), giving the company a market capitalization of approximately HK$ 119.5 billion ($15.3 billion).
In other words, Li Auto’s market value would need to increase by more than eightfold from current levels for all incentives to fully vest.
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