On the evening of March 9th, Li Auto announced that its Board of Directors and Compensation Committee approved the 2021 share incentive plan yesterday and granted 108,557,400 Class B ordinary stock options to its CEO, Li Xiang.
Previously, only other executives and employees were covered by the existing stock incentive plan, excluding the CEO. The new CEO stock incentive plan aligns with the company’s long-term strategy and shareholder interests, and will ensure that the CEO leads Li Auto to become a leading intelligent electric vehicle company for the next 10 years.
The stock option plan depends on the delivery targets that Li Auto achieves. The total number of options is divided into six parts, each consisting of 18,092,900 shares. The exercise price is $14.63 per share or $29.26 per ADS. The CEO will receive the first batch of options when the total number of vehicles delivered by the company in consecutive 12 months exceeds 500,000. The CEO will receive the second to sixth parts of the options when the total number of vehicles delivered by the company in consecutive 12 months exceeds 1 million, 1.5 million, 2 million, 2.5 million and 3 million respectively. Previously, Li Auto announced in an internal company memo that it plans to have a 20% market share by 2025, which corresponds to sales of 1.6 million vehicles.
Li Auto’s CEO stock incentive plan is similar to the long-term performance rewards granted to Musk by Tesla in 2018. This reward system includes 10-year stock options, which are distributed in 12 parts and are linked to Tesla’s market capitalization and various operational objectives. Musk can obtain all performance rewards only when the company’s market value exceeds $650 billion and several revenue goals are achieved. The difference between Li Auto’s incentive plan and Tesla’s is that Li Auto’s plan focuses more on delivery volume, while Tesla’s is based on market value and includes revenue targets.
🔗Source: Li Auto, Li Auto internal memo
This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.