WM Motor Founder’s Annual Salary Reaches $176M as Losses Mount

A prospectus released recently by Chinese electric vehicle maker WM Motor has triggered hot debate in the country. The high pay received by Freeman Shen, the firm’s Founder, Chairman and CEO, has drawn scrutiny amid declining company revenue and major losses.

According to the prospectus, WM Motor’s losses continued to increase between 2019 and 2021, a loss of 8.2 billion yuan ($1.15 billion) in 2021. Shen’s salary in 2021 alone reached 1.26 billion yuan ($176 million), accounting for 30% of the company’s income of 4.7 billion yuan and 72% of the total salary of the company’s management team, which totaled 1.75 billion yuan.

In contrast, Zhu Jiangming, Founder, Chairman, Executive Director and CEO of Leapmotor, received a total annual salary of 9.546 million yuan, accounting for 9.9% of the total salary of major managers, although the brand suffered a 2.85 billion yuan loss in 2021.

Li Xiang and He Xiaopeng, the top executives for two other Chinese vehicle makers, Li Auto and XPeng, received total salaries of 1.504 million yuan and 1.352 million yuan in 2021, respectively. According to these records, Shen’s salary last year was nearly 800 times that of Li Xiang.

However, Shen’s current salary is made up of ordinary salary and restricted shares. The actual salary is only about 2 million yuan, and the rest of the salary is paid in the form of restricted shares, which is equivalent to about 1.259 billion yuan. Shen won’t get the 1.259 billion yuan until after the company goes public. Many companies choose to distribute shares to senior executives before they go public.

Another noteworthy piece of information is that the administrative expenses of WM Motor also increased by 57% year on year to 2.7 billion yuan in 2021. The major reasons for the significant increase were the granting of share awards to members of management and share-based payments to series C+ investors, WM Motor explained.

WM Motor currently has four models on sale, including three SUVs (EX5, EX6, W6) and one sedan (available in E5 and E5 Pro versions). Most of the prices are around 150,000 yuan, and the company’s target market price range falls between 150,000 and 300,000 yuan.

Through its potential Hong Kong IPO, WM Motor is set to raise $800 million at HK$48 ($6.11) per share, Reuters reported on September 25. This is not the first time that WM Motor has submitted a listing application. As early as September 2020, it applied to list in Shanghai after completing D-round financing totaling 10 billion yuan. But before long, the IPO process was suspended. Speculation from insiders showed that the firm had encountered many problems during the review, such as poor business conditions and insufficient scientific and technological capabilities.

In recent years, WM Motor has also repeatedly received negative public feedback. In October 2020, three EX5s were reported to have spontaneously combusted, and in December of the same year, three more EX5s spontaneously combusted within four days. In January 2022, a number of vehicle owners said that WM Motor has locked electricity capacity without the consent of consumers. As a result, the cruising range of its vehicles has been seriously reduced.

SEE ALSO: Another WM Motor EX5 Vehicle Catches Fire in Hainan

WM Motor and Geely’s lawsuit that covers up to $2.1 billion in damages is still pending. Geely is claiming ownership of 27 registered patents and two patent applications held by WM Motor in the lawsuit submitted to the Shanghai Intellectual Property Court. Geely also alleges that WM Motor infringed on its trade secrets.