Who was the richest man in the world last year? Amazon (NASDAQ:AMZN) founder and CEO Jeff Bezos. But there's one CEO of a marijuana producer who received a lot more in compensation from his company than Amazon paid Bezos last year.
Tilray (NASDAQ:TLRY) CEO Brendan Kennedy received total compensation of $31.8 million in 2018. That's more than 18 times higher than the nearly $1.7 million that Jeff Bezos got from Amazon. Why did relatively tiny Tilray think that its CEO was worth more than the CEO of one of the most successful companies ever?
Brendan Kennedy received a salary of $425,000 in 2018. That's a lot more than Jeff Bezos' relatively paltry salary (for CEOs, anyway) of $81,840. Kennedy also received a bonus of another $425,000, while Bezos didn't get a bonus. But the Tilray CEO's big money was made in option and stock grants.
Roughly $25.1 million of Kennedy's total compensation last year came from option awards. Another $5.8 million stemmed from stock grants. What was the total option and stock compensation for Bezos from Amazon in 2018? A big fat goose egg. Believe it or not, Jeff Bezos has never received stock compensation from Amazon. Not one penny.
So where did the remaining $1.6 million of Bezos' total compensation last year come from? Amazon picked up the bill for additional security arrangements for its CEO in addition to what the company already provides at its facilities and when Bezos travels for business purposes. Remember, the richest man in the world tends to require tighter security than the average CEO does.
You could make a pretty good argument that Kennedy deserved to make a lot more than Bezos last year. Tilray stock soared 215% in 2018, making it the best-performing Canadian marijuana stock of the year. Amazon, however, performed dismally last year, with its share price falling 17%.
A matter of timing
While Tilray's good fortune added to Brendan Kennedy's fortune last year, it's a different story in 2019. Tilray stock is down nearly 30% this year. One key factor behind this lousy performance is the company's disappointing fourth-quarter sales.
Amazon, though, is off to the races. So far in 2019, the e-commerce giant's shares are up close to 30% -- a mirror image of Tilray's slide -- despite slowing sales growth.
Over the long term, Amazon has definitely been the superior stock. Amazon's share price has skyrocketed more than 98,000% since its initial public offering (IPO) in 1997. Over the last 10 years, Amazon stock is up more than 2,300%. That puts Tilray's 126% gain since its IPO last year in a much different light.
Jeff Bezos, by the way, has held on to most of his Amazon stock. However, he sold $940 million of shares in 2017 to fund his space exploration company, Blue Origin. Bezos' recent divorce also reduced his Amazon holdings by around 25%. Still, Bezos will remain the richest man in the world -- and Amazon's largest shareholder.
It remains to be seen how much Brendan Kennedy will keep of his Tilray position. Kennedy's private equity firm Privateer Holdings is the largest Tilray shareholder. Privateer stated in January that it won't sell any of its Tilray shares in the first half of 2019. The firm is likely to sell some shares in the future, though, although Privateer managing partner Michael Blue said that any selling would be done "in an orderly and deliberate manner."
Can Tilray make you rich, too?
Even with Tilray's pullback this year, the stock has made Brendan Kennedy a wealthy man -- although he's in a different league of wealth than Jeff Bezos. Could Tilray make you rich, too? Maybe.
Some think that the global cannabis market could top $100 billion within the next decade and perhaps much more than that over the longer term. Tilray has several key partnerships with major companies outside of the cannabis industry, including Anheuser-Busch InBev and Novartis, that could enable it to be a top contender in this global market.
The problem, though, is that Tilray's market cap of nearly $5 billion already reflects expectations of tremendous growth. If the company can't deliver on those expectations, its stock will continue to flounder. Of course, you could have said the same thing about Amazon several years ago.