A Tidy Jackpot for Rare Earth Execs

In today’s get-rich-quick stock market of AI, clouds and quantum computing, making money from something as humdrum as mining seems like a throwback.

Metals company MP Materials gives the lie to that, showing that with a little help from some timely federal government investment, there’s millions to be had for the taking.

After the markets closed on Friday, Oct. 17, the money-losing Las Vegas outfit filed this 8-K disclosing restricted stock grants to its top executives, including one humdinger with a target value of $15 million to chairman and CEO James Litinsky.

MP Materials mines the kind of rare earth minerals like Lanthanum Carbonate, Neodymium-Praseodymium and Cerium chloride, that are critical for high tech and defense-related manufacturing.  That’s why they figure so prominently in the escalating tariff war between the United States and China.

Which is also why the Department of Defense, now War, agreed to a deal in July that among other things called for it to invest up to $500 million. A month later, the agency announced it would lend MP $150 million as part of “a strategic investment.”

Following the July announcement, MP Materials common shares doubled within a week, to more than $60. And it continued to rise, hitting nearly $100 a share on Oct. 14. Shares have since fallen to around $65 a share, but are still about double what they were before the July announcement.

Which is one reason why MP’s new restricted stock grants seem, shall we say, indulgent.

In addition to Litinsky’s new haul, the announced stock awards include another $7.5 million for chief operating officer Michael Rosenthal,  $3.5 million for chief financial officer Ryan Corbett  and $2 million for general counsel and secretary Elliot Hoops.

MP went public in 2020 via a merger with a special purpose acquisition company, or  SPAC in this case, an affiliate of Fortress Investment Group. It’s most attractive asset is a mining and processing site in Mountain Pass, California that makes a big chunk of the world’s rare earth content—making it a ripe target for the Trump administration, which has been buying stakes in or otherwise bankrolling companies like Intel that it views as strategic to America’s interests.

To be clear, before these latest stock grants, the c-suite at MP did not appear to be particularly underpaid. For example, the most recent proxy shows that in 2024, Litinsky was paid around $6 million in total compensation including base pay of $900,000. And a recent Form 4 shows that he owns nearly 14 million shares of MP, which at current prices, is worth around $890 million.

We’re all for rewarding executives who work hard and deliver for their shareholders. But it’s hard to make that argument here. Without that direct investment from the Feds, MP Materials probably wouldn’t have seen its shares jump, based on how the stock has performed over the past few years. What happened seems more like a lucky break than any sort of strategy.