I’m not a big fan of electric vehicles, which still don’t have the range or battery longevity to be tempting as a regular driving option.
Also, outside Telsa (which obviously has some record of financial success), the whole EV space seems screwy. Today’s case in point: A company called Lucid, which I only know from various sketchy speed-test videos on YouTube, paid its CEO $379 million for 2022:
It’s rare for CEOs to rebuke their peers’ outlandish pay packages—mostly because they’d be throwing stones from glass houses—but Lucid Motors’ CEO Peter Rawlinson drew sharp criticism from his EV rival Elon Musk on Monday after earning the title of the highest paid executive in the automotive business.
“Beware any company where leadership compensation is not linked to performance,” the Tesla CEO wrote on X in response to a post about Rawlinson’s pay.
Rawlinson received a $379 million compensation package in 2022 for his role at the luxury EV maker Lucid, including a $575,000 base salary, $5.5 million of stock options, and an incredible $373 million in stock awards, according to a new CEO compensation survey from Automotive News and Equilar.
Notwithstanding Musk’s criticism, Rawlinson earned his huge pay package after hitting market-cap targets for Lucid early last year, SEC filings show. Lucid, like 88% of the 250 largest publicly traded U.S. firms, now uses performance-based compensation for at least some portion of its executive pay.
Snip.
Lucid’s stock fell more than 82% in 2022, and the company earned total revenue of just $608.2 million. Also, when comparing Rawlinson’s pay to his peers in the automotive business, his latest compensation package appears extreme. Rawlinson’s total compensation in 2022 was 11 times greater than the $34 million earned by the second-highest-paid automotive CEO, GM’s Mary Barra, and 21 times greater than the $18.3 million Ford CEO Jim Farley made.
CEOs at fellow EV startups aren’t making anywhere near Rawlinson’s total compensation, either. Rivian Automotive CEO Robert Scaringe earned roughly $1 million in 2022, even though his company is now worth over $22 billion, over 50% more than Lucid Motors’ roughly $14 billion.
Keep in mind that Lucid lost over $2 billion over the last year. Now, startups can take a while before they turn profitable, but paying the CEO of an unprofitable company hundred of millions of dollars to boost the stock price of a money-losing company sounds awful pump-and-dumpish to me. The EV space is hardly free of companies that turned out to be run by fraudsters.
Lucid claims the Lucid Air Sapphire is going to be the fastest production EV in the world, and has heavily FX-edited videos to prove it. Then again, they also had similar videos six years ago.
Like Musk, I still think your company should actually turn a profit before paying your CEO more than any other CEO in the world.
I’m old fashioned that way.
Caveat Emptor.
(Hat tip: Ace of Spades HQ.)
Tags: business, cars, electric cars, Elon Musk, Lucid car company, technology, Tesla Motors
” I still think your company should actually turn a profit before paying your CEO more than any other CEO in the world.”
I kind of take it one step further. There should never be direct salary remuneration. If you are the CEO of a publicly traded company, of any market cap, your compensation is entirely based on shareholder equity. Shareholders do well? Stock goes up? You get paid. Tie remuneration directly to performance. It helps the golden parachute problem too if you tie it to shareholder value, but not entirely.
Except that’s what they did. Their CEO got a windfall because of a contract that paid him when the shares went up, even though they’re not profitable.
All of this “green energy” crap is purest grift. All this is would be another version of Solyndra, perpetrated by the same people for the same reasons…
They’re plundering the economy, at the roots of it all. Consider the opportunity costs that all the “investment” in this company has accomplished; what could that money have been doing, that would actually have done something positive?
You can only do this sort of vanity BS so long as there’s sufficient slack in the economy. We’re running up against the unpleasant moment when it becomes clear that, no, we really can’t do all these wunnerful, wunnerful things they keep telling us about.
Raw physics and the energy densities available with batteries make it abundantly clear to anyone who graduated from high school with a decent transcript that all this crap is outright delusional. You cannot get that amount of energy out of a battery; you will always have that problem until we have much better batteries, which still ain’t happened yet. I remember reading about how all this wonderful high-tech battery technology was coming along, realsoonnow, and we’re not even close today, some twenty-thirty years after the dates when they projected.
Technology doesn’t come along on any timeline that you can use to project economic planning on. They’d have done a lot better to work on rectified liquid hydrocarbon fuels that pollute less, and which could be handled by existing infrastructure. That’s reasonably do-able. Electric everything? ROFLMAO… Not even close.
There was a proposal a few years back to apply coatings to auto radiators such that your new car would catalyze any excess emissions of the car in front of you in traffic, making the air cleaner for everyone even though all the vehicles on the roads don’t have the latest and cleanest emission systems. It worked because those catalysts needs to be heated to work well, and the particular catalyst proposed for radiator coatings could do it’s catalyzing at about the temp of a hot radiator surface in air, and last a really long time.
It went nowhere. The added expense would come out of the auto manufacturers pocket, and there was no appetite to subsidize this as it still was using icky internal combustion engines.
But really quite large direct subsidies for electric vehicles, with all the constraints noted, which could demonstrably be charging using electricity from the dirtiest remaining coal-fired power plants in the US and belching pollutants into everyones air? No problem! Mother Gaia Approves!
Prior to the USSC decision that upheld Acquisition of Control rules by state legislatures, it was easier to get rid of grifters like Rawlinson and replace the Board of Directors who hired him.
Ever since the 1987 ruling, corporate wages and benefits have risen continuously, even as hourly wage rates stagnated.
In Japan, a CEO’s salary is approximately 10x greater than the hourly worker in his industry; in these United States the differential is not infrequently 100-to-1.
What accounts for this disparity? Part of the explanation involves the use of stock options: a company uses its retained earnings to purchase its own stock; the stock is bid up in price; the option is exercised and added to the base salary of those who purchased the stock using corporate earnings.
If retained earnings had been used for Research and Development or capital improvements, the product line could have been improved and labor productivity enhanced. Product line improvements are undertaken with the goal of increasing demand for the product so as to increase market share. Increased labor productivity enables wages to rise. Producer and consumer alike benefit from this process.
By tipping the scales in favor of corporate protectionism, Justice Powell left us an evil legacy.
[…] MONEY: CEO Gets $379 Million For Money-Losing EV Company. “Keep in mind that Lucid lost over $2 billion over the last year. Now, startups can take a […]
I wouldn’t rely on a someone with a 2002-era blog design to be up to date on anything high-tech.
Just because EVs were not viable two decades ago does not mean they are not viable in 2023.
I think it’s only an issue for Lucid shareholders. They’re foolish to accept this insanity, but it’s their call.
As Milton Friedman said, you may be a fool for riding a motorcycle without a helmet, but, in a free society, you’re allowed to be a fool.
A market-cap target scarcely seems an appropriate “performance-based” compensation measure. How about vehicle sales or some level of positive unit contribution?
Thanks for the link. I enjoy following Texas politics in my old state of Texas here at Battleswarm.
Anon said:
Just because EVs were not viable two decades ago does not mean they are not viable in 2023.
Unfortunately, the laws of physics don’t change in accordance with your fantasies, and there haven’t been any really significant breakthroughs in the requisite technologies in the last two decades. It is unlikely that we will see really viable electric transportation until room-temperature superconductors and zero-loss energy storage mediums are achieved. Even then, I suspect that the nature of the storage media will be such that they’d be a lot more risky than liquid hydrocarbons… Not to mention, a hell of a lot heavier.
Wish-gineering builds lovely castles in the air, but lousy real-world products.
Like many, I became interested in Lucid since Car and Driver awarded them car of the year. Unfortunately, Car and Driver ain’t what she used to be. It didn’t help that CNBC Cramer started harping on the company as a buy. But I read the article by Car and Driver, and what I liked about Lucid is it was attempting to build a vehicle with decent performance yet with a focus on range. Range that was more comparable to what a person could drive in a single day. That’s a good niche for an EV company to exploit. Too bad they never kept up that strategy. You can buy a Tesla Model S for $10k cheaper with 10miles less range than a Lucid Air, with the Tesla outperforming the Lucid in speed and technology. When you have to stop, the Tesla can be charged faster.
Still, I prefer my gas-powered Merc.