CEO Scorecard: GM versus Tesla

Daily Profit Investing Research
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General Motors CEO gets paid more than Tesla’s Elon Musk.

That’s despite having horrible performance.

How’s that even possible?

First, let’s take a look at the compensation.

General Motors (NYSE: GM) CEO Mary Barra has been a bit of a failure(see yesterday’s email).

Yet that hasn’t stopped her from collecting $226 million over the last 6-years:

  • $29.9 million in 2018
  • $30.1 million in 2019
  • $40.7 million in 2020
  • $62.3 million in 2022
  • $34.1 million in 2022
  • $29.0 million in 2023

Meanwhile, since 2018 Tesla (NASDAQ: TSLA) CEO Elon Musk has worked for free.

Elon’s 2018 compensation plan said he would receive “no salary, no cash bonuses, and no equity that simply vests by the passage of time.”

Instead, Musk would receive stock options in exchange for hitting a series of 12 milestones.

The plan was proposed by the Tesla board. And received support from 73% of shareholders.

Elon went on achieve all the goals of the plan. As a result, he received stock options valued at $56 billion.

Last week a Delaware judge ruled the plan invalid.

This means Elon has worked without compensation for the last 6-years.

Second, let’s look at the performance of the two CEOs.

One measure of a company’s success is its financial growth. Here’s what happened from 2018 – 2023…

Revenue growth:

  • +17% for General Motors
  • +350% for Tesla

Cash earnings (EBITDA) growth:

  • +53% for General Motors
  • +730% for Tesla

Those numbers are important…

But most shareholders care about the stock price.

You can see that during the last 6-years…

General Motors stock is down 9% (black line). The S&P 500 is up 83% (blue line). And Tesla is up 747% (orange line).

You can see that GM has been an investment failure – while Tesla has been one of the biggest winners.

Now, I want to be clear…

Elon is the #2 wealthiest person in the world.

It’s hard to feel “sorry” for him – given the financial challenges experienced by so many people.

However, this situation highlights the difference between crony capitalism and true capitalism.

Mary Barra is richly compensated at GM for the last decade – despite a horrible track record.

Meanwhile, Elon embraces true capitalism. He leads Tesla for 6-years with his compensation 100% tied to his performance.

Elon delivers the results.

Only to have the rug pulled after the work was completed.

That’s just my 2 cents.

Ian

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