Recently, Li Xiang, the CEO of Li Auto, stirred up heated discussions after a reported "annual salary of 639 million yuan" for 2024.

Upon verification by media outlets, Li Auto responded that this figure was inaccurate, clarifying that Li Xiang's actual compensation amounted to 2.66 million yuan.

The 600 Million Yuan Salary: A Misinterpretation

The controversy arose when observers noticed that Li Xiang's total compensation as per Li Auto's 2024 financial report totaled 639 million yuan.

The compensation breakdown was as follows: 2.66 million yuan in salary, 160,000 yuan in pension, and 636 million yuan in equity incentives.

This astronomical figure immediately sparked widespread curiosity and speculation about the company's inner workings, almost evoking a sense of revolution among those eager to redistribute wealth.

Li Auto promptly set the record straight, educating the public that "options do not equate to actual compensation."

According to U.S. stock market accounting standards, Li Xiang actually received only the 2.66 million yuan pretax salary portion.

To obtain the over 600 million yuan in equity incentives, Li Xiang must meet two primary conditions: Li Auto must sell 500,000 units in 2024, and he must purchase shares at a price of $29.26 per ADS (a notably high exercise price).

Currently, Li Auto's share price is approximately $25 per ADS. For Li Xiang to exercise this option, he would need to subsidize $32 million, or roughly 230 million yuan, to cover the agreed "bet" price difference.

Importantly, Li Xiang has yet to make this payment, meaning he has not actually realized any equity gains.

The "Low Salary + High Equity" Model in New Forces

Upon reviewing the financial reports of other automakers, it becomes evident that the "low salary + high equity" model has become standard practice among executives in new-energy automakers.

This strategy is straightforward: by offering equity incentives, a substantial pie is presented to executives, alleviating short-term financial pressure on the company while deeply tying their personal interests to the company's long-term value, fostering a shared interest community.

For instance, He Xiaopeng, Chairman of Xpeng Motors, earns an annual salary of 1.676 million yuan; Zhu Jiangming, Chairman of Leapmotor, earns 8.119 million yuan (less than his vice president); and Li Bin, Chairman of NIO, has even revealed that his annual compensation is less than 1 million yuan, lower than some other NIO executives.

Looking at Li Xiang's case specifically, his annual salaries over the past three years were 1.566 million yuan, 1.765 million yuan, and 2.665 million yuan, respectively, showing a gradual increase but none considered exceptionally high. In fact, his actual annual salary is only one-fifteenth that of President Ma Donghui.

With Li Auto's annual sales exceeding 500,000 units in 2024, securing the annual sales championship among new forces, the "milestone incentive" clause was triggered, resulting in over 600 million yuan in incentive expenses.

However, due to the high exercise price condition and the current market share price being unattainable, to obtain this portion, Li Xiang would need to spend considerably – subsidizing 230 million yuan to leverage 636 million yuan.

Crucially, even with the subsidy leverage, this money is more symbolic than practical. A small withdrawal might pass unnoticed, but a significant withdrawal could raise suspicions of "taking the money and running," leading to negative publicity and scrutiny from both within the company and by competitors. Consumers might worry about dealing with short-sighted enterprises, questioning whether to continue engaging with such entities.

In conclusion, the so-called "low salary + high equity" model is essentially a capital game, with talk of U.S. GAAP and other accounting standards serving merely as a decoy to maintain stability and ensure compliance.