Here’s what Xiaomi said about CEO’s US$1.5 b stock award, producing space rockets

Xiaomi CEO Lei Jun, dressed in a black suit with bright red tie, introduced his management team and answered questions from the media in Hong Kong about his company’s highly anticipated IPO. The public offering will open for subscription on June 25 and close on June 28.

During the 90-minute press conference at Hong Kong’s Four Seasons Hotel, Lei called Xiaomi’s business model – which he has labelled as a “triathlon” of hardware, e-commerce and internet services – as a “new species”.

Not everyone agrees. The Chinese securities regulator asked Xiaomi whether it considered itself a hardware or internet company, while international institutional investors questioned the valuation which they thought was high for a hardware company.

Lei said he has given it a thorough thought over the past few days and figured out an answer. “You don’t have to struggle to find out what kind of company Xiaomi is. What I care more is that Xiaomi is an unique company,” he said.

Xiaomi will be the first company to be listed in Hong Kong with a dual-class shareholding structure.

Lei and Xiaomi’s executives took questions and here are some of the notable moments.

Q: Why Lei Jun was given nine-billion-yuan stock reward before the IPO?

Xiaomi co-founder and President Lin Bin: This stock reward decision was passed by the board with Lei Jun knowing nothing about it. This is a reward for Lei’s past eight-year devotion. The board thinks he totally deserves it. Xiaomi is not the first one to reward its founder before the IPO and will not be the last one.

Q: Why has Xiaomi abandoned its CDR plan all of a sudden. Is it because there are disagreements between Xiaomi and Chinese regulators on the company’s valuation? Does the company have any timetable for a CDR and will it be within six months?

Xiaomi CFO Shou Zi Chew: We don’t have a timetable yet. We have discussed with the regulators and reached an agreement that in order to insure the quality of CDR, we decided to list in Hong Kong first then we’ll find a good time to list in the A-share market.

Xiaomi was asked four times in total during the press conference about its abandoning the CDR. The management team answered twice then declined to answer further questions regarding the topic.

Q: Will Xiaomi produce rockets in the future?

Lei Jun: Our team unceasingly explores new possibilities. But this presser is about the IPO. Let’s discuss about this later.