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Lucid red flag alert: CEO earned over half of company’s 2022 revenue

Lucid red flag alert: CEO earned over half of company's 2022 revenue

In an incredibly challenging year for US electric vehicle (EV) manufacturer Lucid Motors (NASDAQ: LCID), the company finds itself grappling with disappointing quarterly deliveries and a plummeting stock price, drawing sharp criticism from investors and analysts. 

However, what has left many particularly astounded is the staggering pay package awarded to Lucid’s CEO, even amidst growing concerns over production and profitability.

Notably, Lucid reported just $608 million in revenue for the fiscal 2022, $379 million of which was paid to the company’s Chief Executive, Peter Rawlinson. In other words, Lucid’s CEO earned more than half of the company’s entire annual income last year. 

This figure made Rawlinson by far the highest-paid executive in the automotive industry and more than the combined pay of the CEOs of the world’s largest companies, including Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOGL), real estate investor Graham Stephan highlighted on October 7. 

Why did Rawlinson earn such a big compensation package?

In detail, Rawlinson’s $379 million package included a $575,000 base salary, $5.5 million in stock options, and a staggering $373 million in stock awards, according to a CEO compensation survey conducted by Automotive News and Equilar

Moreover, it appears that this small fortune was awarded to Rawnlinson after he successfully hit market-cap targets for Lucid in early 2022, according to SEC filings. Like the vast majority of the biggest publicly-traded US companies, Lucid also uses performance-based compensation for at least one portion of its executive pay. 

“One reason we see pay-for-performance models favored is they are generally viewed more favorably by the shareholders, to the extent that the achievement of financial performance is linked to value creation for the shareholders,” Noah Kaplan, a managing director at the management consulting firm FW Cook.

said in an interview with Fortune earlier this year. 

The reports of Rawnlinson’s pay package attracted criticism from many in the EV industry, including Tesla (NASDAQ: TSLA) boss Elon Musk.

In fact, it appears that Musk does not believe that Rawlinson’s outlandish compensation was related to performance at all. 

“Beware any company where leadership compensation is not linked to performance.”

– the CEO of the biggest EV maker said on X last month.  

While that may or may not be true, one could argue that there is an argument behind Musk’s comments. At the end of the day, Lucid’s shares plummeted over 82% in 2022, and the automaker earned a total revenue of just $608 million. 

For comparison, the second-highest-paid automotive executive, GM CEO Mary Barra, earned $34 million in 2022, while Ford CEO Jim Farley bagged $18.3 million last year. 

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