Cannabis Compensation #2: Executive Compensation in Cannabis Companies

Fred WhittleseyThe Cannabis Compensation Blog

From the
Cannabis Compensation Consultant

“A page-by-page peek at pair of popular pot periodicals and the people who publish pages for the partying portion of the population.” That was the subtitle of a term paper in Journalism 101, circa 1976, and the professor was the founder of the LA Free Press, Art Kunkin (died 30 April 2019). The paper received a grade of “A”. Who would have thought that more than 40 years after my freshman year I would be writing a blog (What’s a blog? Is that journalism?) on my website (?) discussing compensation in the cannabis industry (it’s an “industry”?)

The term paper compared and contrasted Marijuana Monthly and High Times.  Back issues of Marijuana Monthly (there are only back issues) can be found on eBay. I got to interview the top executives of Marijuana Monthly but High Times declined.  The top executives of Marijuana Monthly commenced the interview by offering me a bong hit.  Several bong hits actually.

In Cannabis Compensation #1, I referenced Tilray.  The CEO of Tilray, reported in the Seattle Times as being “paid” $31.8 million in 2018, was listed as one of the High Times 100 of 2018.  This guy is making the ranking in quite disparate media.

My firm has the only known database of executive compensation in the cannabis industry – and, oh yes, it’s an industry. So how are cannabis executives paid? And like the pay of Brendan Kennedy of Tilray, will it be the highest (ha) paying industry ever?

Let’s drill down on both the amount of Mr. Kennedy’s pay, and some of the interesting details. All dollar amounts except per share amounts are in $US(000). Tilray’s 2018 revenue was $43,130.

Cash Compensation

Base Salary = $425
NEIP = $0
Bonus = $425 (100% of base salary)


  • While that is a “discretionary” bonus (according to the SEC), it is specifically mentioned as a target amount in his employment agreement. Looks like he exactly hit (ha) his target.
  • Cash compensation comprising 2.7% of total compensation.

Equity Compensation

Options = $25,147 (strike price of $7.76)
Stock Awards = $5,819
Market Value of Equity Not Yet Vested = $52,905 (FMV at date of disclosure FYE = $70.46)


  • Options are on Class 2 common stock (1 vote vs. Class 1 with 10 votes)
  • 79% of total compensation is the ASC 718 value of options (yawn)

Reflecting the current fad in technology companies of dual classes of stock (Facebook, Snap, Google, Lyft, Uber) the complexities of valuation will not be addressed here as they are not adequately addressed in ASC 718.  Is voting power of value to employees? (The answer is “no”). Did the ASC 718 value approximate the intrinsic value of the Tilray options 6 months later? No.

The nascent cannabis industry is being compared to what occurred in the so-called dot-com era except these cannabis companies actually have revenue, profitability (sometimes), and paying customers. Given the Canadian roots (ha) of legalized pot the Canadian governance environment may create a hybrid (ha) compensation culture for many public companies (Aurora Cannabis, Supreme Cannabis, Trulieve Cannabis, Canopy Growth – to be covered in future blogs) and it will be interesting to see how it evolves. As these companies move to the NYSE and maintain their Canadian listing this joint (ha) exchange status may add some governance issues.

So much to blog about!

For more cannabis compensation blog posts, go to Pay and Performance:  The Compensation Blog


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