Elon loses investors billions, takes home over $500 million

Elon Musk loses investors billions, takes home >$500mio

When coming up with lists of stocks to avoid investing in, starting with companies with the most excessive executive compensation can often be a good place to start. While I do believe top-talented executives should be paid well for making us shareholders wealthier, I feel I get a better sense each year of which multi-million dollar pay packages are a well-earned share of shareholders’ gains, and which are more examples of executives benefiting themselves at the expense of shareholders. In Bloomberg’s latest ranking of top-paid executives, Tesla’s Elon Musk ranked #1 with total compensation over US$500,000,000 in 2018, roughly double that of #2 ranked marijuana company CEO Brendan Kennedy.

Elon took home this half-billion dollar package after Tesla lost over $1 billion in 2018 and another $2 billion in 2017. Mr. Musk’s pay came almost entirely in the form of option awards, meaning he made money from pushing up his stock price from their levels many years ago, though as we pointed out earlier, this is the less sustainable of the two ways to make money in stocks. Tesla’s continued losses, skyrocketing debt levels, and lack of edge over faster and cheaper Chinese competitors are just some of the reasons we started shorting Tesla stock last year in our most aggressive accounts.

As I tweeted last week, even ESG scoring systems differ on whether Tesla is an ESG leader (because electric cars are good for the Environment), or an ESG laggard (because of bad Governance). I continue to say that on balance, taking home so much pay while your company burns billions is a great example of how not to run a company.

Do you agree or disagree? I look forward to hearing your thoughts.

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