Xiaomi founder Lei Jun earned almost as much as the company last year but pledged to donate it to charity

Xiaomi’s annual adjusted net profit for 2018 was 8.6 billion yuan (US$1.3 billion)
Reuters

The founder and CEO of Chinese smartphone maker Xiaomi received almost as much in compensation last year as the company made in profit.

Xiaomi said in a filing to the Hong Kong stock exchange on Wednesday that its chief executive and executive chairman Lei Jun received one-off compensation of 636.6 million B-class shares for 2018, currently valued at HK$7.5 billion (US$956 million) based on Tuesday’s closing share price.

Xiaomi’s annual adjusted net profit for 2018 was 8.6 billion yuan (US$1.3 billion), the company reported last month.

The Class B shares are still controlled by Lei and have not been disposed of, according to the filing made to the Hong Kong stock exchange.

A Xiaomi spokeswoman said the company had no further comment.

The company said in the filing it was voluntarily identifying Lei as the recipient of the shares “in response to certain news articles published recently”, which had claimed Lei’s compensation last year exceeded the company’s profit.

Xiaomi posts 13.5 billion yuan profit in 2018, driven by strong global smartphone sales

After Xiaomi’s post-IPO lock up period expired in January Lei pledged to not sell any of his stock in Xiaomi for a year.

Lei’s compensation package last year was considered a one-time “reward” for the CEO’s eight-years of “devotion” to the company prior to it going public in Hong Kong, according to Xiaomi president Lei Bin, speaking at the company’s IPO press conference last summer.

“This stock reward decision was passed by the board with Lei Jun knowing nothing about it,” Lin said at the time. “Xiaomi is not the first to reward its founder before an IPO and will not be the last.”

Wednesday’s filing added that Lei had promised to donate “all the relevant shares after deducting any tax payable for charitable purposes.”

Xiaomi has felt the brunt an economic slowdown and a saturated smartphone market in China. Last year, smartphone sales in the country shrunk by more than 34 per cent year on year in the fourth quarter.

The soft market at home was offset by the company’s rapid growth in India and Europe. Xiaomi toppled Samsung Electronics to become the No 1 smartphone brand in India last year, thanks to its budget Redmi phone brand.

In the European smartphone market Xiaomi ranked fourth last year, according to estimates by research firm Canalys.

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However, the company’s expansion plans for the US have stalled over US-China trade tensions.

The company has “no timetable” to enter the US market through local carriers, Xiaomi’s senior vice-president in charge of international expansion Wang Xiang said in an interview last month. In March 2018, Lei had said the original goal was to expand the firm’s smartphone business in the US by the end of 2018 or early this year.