Skyrocketing compensation to chief executives at large corporations continues to be a topic of heated debate. Nowhere is that more clear than in the latest list of best-paid executives in 2018, which includes well-known names such as Tesla's chief Elon Musk, Walt Disney CEO Bob Iger, and Apple's Tim Cook.
It may be no surprise that another highly paid executive comes from an emerging industry that took the market by storm: legal marijuana. As pot scored a series of legal wins, a slew of cannabis producers went public in the U.S. The first among them was Tilray Inc. (TLRY), a Canadian company majority-owned by private equity firm Privateer Holdings.
Among the biggest beneficiaries of Tilray's success was its CEO and President, Brendan Kennedy, who was the second-highest paid U.S. executive among companies traded on U.S. exchanges in 2018.
- The list of highest-paid CEOs in 2018 includes familiar names like Tesla's Elon Musk, Apple's Tim Cook, and Disney's Bob Iger.
- A notable name that moved up to the No. 2 spot is Tilray's Brendan Kennedy.
- Two executives at Blackstone, Tony James and Stephen Schwarzman, made the list as well.
- Compensation data includes salaries, bonuses, stock and option awards, and perks.
Listed below are the ten highest-paid executives in 2018 and ranked according to the Bloomberg Pay Index. Bloomberg's analysis includes salaries, bonuses, and equity awards that are valued at each company’s fiscal year-end. Recurring grants or options are counted in the year they’re bestowed, and one-time grants meant to compensate an executive for several years are allocated over the period as explained in filings.
1. Elon Musk - CEO Tesla
With a total compensation of $513 million, Elon Musk's name at the top of this list obviously raises many eyebrows. His electric-car manufacturer, Tesla Inc. (TSLA), posted a $1 billion loss in 2018, and Musk has never wanted a salary (he is paid minimum wage to abide by the law, but he doesn't cash the checks).
99.9% of Musk's compensation in 2018, Bloomberg says, was in the form of stock options tied to performance goals. In January 2018, Tesla announced a 10-year grant of stock options that vest in 12 tranches where each tranche vests only if market cap and operational milestones are met. "His $513.3 million figure for last year includes a tranche of the 2018 grant and part of a similar but smaller options award received in 2012," according to Bloomberg. Tesla sent Bloomberg a statement saying that its analysis is not accurate. “This analysis wrongly assumes that Elon received 1/10th of the combined value of his 2012 and 2018 performance packages, when in reality not a single dollar was realized last year,” according to Tesla.
2. Brendan Kennedy - CEO and President, Tilray
Over 95% of Kennedy's 2018 package, which totaled $256 million, consisted of a pre-IPO bonus. His base salary was $425,000 in 2018, up from $375,000 in 2017. He received a bonus equal to his base salary in addition to options awards worth $11.3 million. The Yale School of Management graduate and co-founder of Tilray also founded Privateer Holdings in Oct. 2011. He still serves as its executive chairman.
3. Bob Iger - CEO and Chairman, Walt Disney
In 2017, Walt Disney Co. (DIS) extended CEO Robert Iger's contract through 2021. It compensated him generously for his willingness to stay and for his successful closing of the 21st Century Fox deal. He was compensated too generously, according to the majority of shareholders and even Disney heiress Abigail Disney, who called his pay "insane." “Jesus Christ himself isn’t worth 500 times his median workers’ pay,” Disney, the granddaughter of one of the co-founders, said to CNBC.
Iger also received perks worth $1.1 million, the highest of anyone on this list. The House of Mouse later trimmed his potential package for 2019 by $13.5 million and increased his performance targets to placate shareholders. His compensation in 2018 equaled $146.6 million.
4. Tim Cook - CEO Apple
In Aug. 2018, Apple (AAPL) granted Cook 280,000 time-based and 280,000 performance-based vested restricted stock. These stock awards were worth $126 million. They were received on top of a base salary of $3 million, a cash bonus of $12 million–his biggest ever–and perks worth $682,000. He is the only FAANG executive in the 2018 ranking. The total compensation was $141.6 million.
5. Nikesh Arora - CEO and Chairman, Palo Alto Networks
Palo Alto Networks (PANW) CEO Nikesh Arora, a former Google and SoftBank executive, was hired in June 2018 to lead the Santa Clara-based cybersecurity firm. Despite his lack of experience in the area, he was rewarded handsomely with a lucrative pay package.
On top of a sign-on award of $19 million in restricted stock units that vests over four years, Arora received stock awards worth $39.3 million and option awards worth $72 million. Computer Retail Week reported that 63.7% of shares opposed the compensation package, which was $130.7 million for the period, in a non-binding vote.
6. David Zaslav - CEO and President, Discovery
Zaslav, who has led Discovery (DISCA) since 2007, signed a new employment contract in 2018 that provided $122 million in compensation and represented a significant pay bump. On top of a base salary of $3 million and a $9 million bonus, he received stock awards worth $15.3 million and stock options, including a retention award, worth almost $100 million. The package he took home in 2018 is still less than the $156.08 million that he made in 2014.
7. James Heppelmann - CEO and President, PTC
Shares of Boston-based computer software and services company PTC Inc. (PTC) hit a record high in 2018, and CEO James Heppelmann took home a bonus of $961,000 along with his base salary of $800,000. The total compensation was $71.5 million. The majority of his compensation came from a performance grant tied to goals spanning several years, according to a company spokesperson. Shareholders will be happy to note that Heppelmann received the lowest amount in perks of anyone on this ranking.
8. Stephen Schwarzman - CEO/Chairman Blackstone Group LP
Blackstone Group LP (BX) CEO Stephen Schwarzman co-founded the multinational investment firm in 1985 with a balance sheet of $400,000 and a staff of four. Bloomberg reports that $67.4 million of Schwarzman's compensation in 2018 was in the form of carried interest. The company also spent $1.4 million on his perks. Schwarzman's total compensation was $69.1 million.
9. Tony James - Executive Vice Chairman, Blackstone Group LP
Harvard alum and Blackstone veteran, Hamilton "Tony" James, handed over day-to-day management of the firm to Jon Gray in 2018 and assumed the title of executive vice chairman. Besides his $350,000 salary, James received a $28.8 million bonus and carried interest of $36.8 million. He received $66.2 million in compensation.
10. Stephen Angel - CEO, Linde PLC
The merger of industrial gas major Linde PLC (LIN) and Praxair Inc. was completed in 2018. Angel was the CEO and chairman at Praxair since 2007 before taking the role of CEO at Linde after the merger. Angel chose to receive a $48.9 million severance payout of the pension he had accumulated at Praxair over 18 years, according to The Wall Street Journal. He also received stock and option awards worth $12 million and a bonus of $3.6 million. His total compensation was $66.2 million.