Elon Musk has been the CEO of Tesla, Inc. (NASDAQ:TSLA) since 2008. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at other big companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Tesla
How Does Elon Musk’s Compensation Compare With Similar Sized Companies?
Our data indicates that Tesla, Inc. is worth US$93b, and total annual CEO compensation was reported as US$2.3b for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$56k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
Thus we can conclude that Elon Musk receives more in total compensation than the median of a group of large companies in the same market as Tesla, Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Tesla has changed over time.
Is Tesla, Inc. Growing?
Over the last three years, Tesla, Inc. has not seen its earnings per share change much, though they have deteriorated slightly, according to a line of best fit. It achieved revenue growth of 39% over the last year.
As investors, we are a bit wary of companies that have lower earnings per share, over three years. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. In conclusion we can’t form a strong opinion about business performance yet; but it’s one worth watching. You might want to check this free visual report on analyst forecasts for future earnings.
Has Tesla, Inc. Been A Good Investment?
I think that the total shareholder return of 110%, over three years, would leave most Tesla, Inc. shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary…
We compared total CEO remuneration at Tesla, Inc. with the amount paid at other large companies. As discussed above, we discovered that the company pays more than the median of that group.
One might like to have seen stronger growth, but shareholder returns have been pleasing, over the last three years. Considering this fine result for investors, we daresay the CEO compensation might be apt. Shareholders may want to check for free if Tesla insiders are buying or selling shares.
If you want to buy a stock that is better than Tesla, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
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