It’s “either career suicide or it’s the smartest decision we’ve ever made in our lives—and we won’t know for three to five years,” Kennedy told Bloomberg in 2012.
The windfall didn’t arrive for six years, but close enough. In July, Tilray became the first cannabis company to list its shares on a US exchange and rode a wave of investor hype to end 2018 with a 315% gain. That made Kennedy, its 47-year-old CEO, the 2nd-highestpaid executive in 2018 among companies traded on US exchanges, according to the Bloomberg Pay Index. His $256 million compensation package trails only the $513 million Tesla awarded to Elon Musk.
Bob Iger of Walt Disney stood third in the pay ranking. He’s followed by Apple’s Tim Cook and Nikesh Arora, the former SoftBank Group executive who took over as CEO of Palo Alto Networks last year. Kennedy, unlike the other four, hasn’t previously been among the world’s top-paid managers. With Tilray, he joins exclusive club of entrepreneurs whose gambles yielded compensation packages of a magnitude rarely seen at bluechip companies. Examples include Snap’s Evan Spiegel, who was crowned the king of pay for 2017 with a half-billiondollar package, and GoPro’s Nick Woodman, who led the list in 2014 with $285 million.
Like Kennedy, Spiegel and Woodman received big packages tied to their companies successfully launching initial public offerings (IPOs).
“IPO grants serve two purposes — alignment with shareholders and retention, because an executive disruption at that stage can be very problematic,” said Aalap Shah, MD, Pearl Meyer, a consulting firm that specialises in executive compensation. “The thing for shareholders to question is diminishing returns. Is there a point where the IPO grant isn’t really worthwhile?”
The Bloomberg Pay Index tracks the 100 highest-paid executives at companies that submit compensation details to US regulators. The figures on the index consist of salaries, bonuses and benefits doled out in the most recent year.
They also include the value of awarded stock options and restricted shares that may yield payoffs in the future. For comparison purposes, all such equity awards are valued at each company’s fiscal yearend, not as of the date they were granted. The index’s figures can therefore differ from those disclosed in filings—sometimes by a lot—depending on stock-price changes and dividends. Recurring annual grants of shares or options are counted in the year they’re bestowed, not when they vest. Any one-time grant meant to compensate an executive for several years is allocated over the life of the award as explained in regulatory filings.
Tesla’s Musk, for example, receives no compensation aside from large grants of stock options tied to performance. The securities are meant to pay him for a decade. But in cases where the targets were met ahead of schedule and the options have vested, he’s received new grants.
News credit : Indiatimes