Elon Musk Asks Telsa Shareholders To Reinstate His $56 Billion Pay Package (2024)

The majority of Elon Musk's net worth comes from his stake in the publicly-traded electric car company Tesla. By our calculation, out of his current $175 billion net worth, roughly $111 billion is attributable to his shares in Tesla. I'll explain the math behind that $111 billion calculation in a moment because it's actually very pertinent to this article. Elon's stake in the privately-held SpaceX is worth around $77 billion. He owns some other assets, but he also has A TON of debt, thanks largely to his terribly-timed $44 billion acquisition of Twitter. When you put it all together ($111 + $77… minus a bunch of debt, plus some other assets…), you get $175 billion. Tesla's stock price is down 40% since January 1. That drop has shaved $55 billion from Elon's net worth and dropped him from being the #1 richest person in the world to the current #4 richest person in the world (behind Mark Zuckerberg, Jef Bezos and Bernard Arnault, in that order).

Let's look more closely at Elon's $111 billion stake in Tesla. His Tesla shares can be separated into two buckets: 1) Shares he directly owns right now free and clear, and 2) Options he was awarded after dramatically increasing Tesla's market cap. This second bucket is what we are focusing on today.

Back in January, a Delaware judge sided with a shareholder who sued Tesla and Musk over these options. At the time, the options were worth around $56 billion. In her ruling, the judge VOIDED those options, effectively DELETING $56 billion from Elon's net worth. And now Elon is asking Tesla shareholders to officially un-delete his options.

2018 Compensation Package

Long story short, Elon Musk does not earn a salary as CEO of Tesla. Back in 2018, he agreed to forgo all standard forms of compensation in exchange for a highly unusual incentive-based pay package that would give him an additional 1% stake in the company (up to 12%) every time Tesla's market cap increased by $50 billion under his watch. At the time the deal was signed, Tesla's market cap was $50 billion. If Elon increased Tesla's market cap above $600 billion – the highest level – he would have unlocked 12 goals and received 12% of the company's outstanding shares.

Most people thought this plan was nuts. At most, MAAAYYYBE Elon would unlock the lowest-level goal of getting Tesla to go from $50 billion to $100 billion. For perspective, at the time of the deal, General Motors' market cap was $60 billion.

As it turned out, it only took Elon two years to grow Tesla from a $50 billion company to a $600 billion company. And a year after that, Tesla's market cap hit $1.23 trillion. And during that period when Tesla was trading above $600 billion, Tesla's board of directors officially approved and rewarded Elon with 12% of the company in the form of options. When they approved the payment, the options were worth $100 billion.

Shareholder Lawsuit

You might assume that every single Tesla shareholder who owned the stock in the period when the company grew from $50 billion to $1 trillion+ would be nothing short of ecstatically in love with Elon Musk and the Tesla board for forging this compensation package. And for the most part, that's true. But there was at least one shareholder who, for some reason, was unhappy. Unhappy enough to file a lawsuit, in which he claimed the 2018 deal was both egregiously generous and pushed through by a board of directors made up of Elon's buddies and relatives who did whatever he told them to do.

The lawsuit went ahead, and incredibly, in January of this year, a Delaware judge sided with the shareholder! As a Delaware-based company, the judge was within her power in her ruling to VOID the deal altogether. From her ruling:

"In the final analysis, Musk launched a self-driving process, recalibrating the speed and direction along the way as he saw fit. The process arrived at an unfair price… The most striking omission from the process is the absence of any evidence of adversarial negotiations between the Board and Musk concerning the size of the grant…

Swept up by the rhetoric of 'all upside,' or perhaps starry eyed by Musk's superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?"

Fast forward to the present.

We have not removed these options from Elon's net worth calculation for two reasons!:

  • #1) He can (and will) appeal the ruling
  • #2) He can ask Tesla shareholders to vote to reinstate the payment.

On Wednesday, Tesla made a filing with the SEC, which stated it plans to ask its shareholders to approve two proposals in an upcoming vote:

  • #1) To reinstate Elon's $56 billion pay package
  • #2) To reincorporate Tesla in Texas, moving it away from the punishing judgment of Delaware courts

I have no idea how this vote will turn out. On the pay package question, I will say that Elon isn't quite the superstar he was between 2018 and 2022. As we stated previously, the stock has dropped 40% since the beginning of the year and Tesla's market cap is actually back down under $500 billion today. If you were a Tesla shareholder, would you want to give Elon $56 billion? Wouldn't $10 billion be an equally incredible reward by any objective measure? If so, that would give the company $46 billion to invest in new products or return to shareholders. On the other hand, if you spurn Elon, does he leave the company altogether to focus 100% of his efforts on SpaceX? And if that happened what would happen to Tesla's stock price?

If shareholders do vote NO on the pay package question, at today's levels, Elon's net worth would sink to around $125 billion overnight. That would drop him to the 11th richest person in the world, right behind Sergey Brin. In addition to co-founding Google, Sergey was a very early Tesla investor. He was also formerly married to Nicole Shanahan who Elon allegedly had an affair with and is now Robert Kennedy Jr.'s running mate.

Elon Musk Asks Telsa Shareholders To Reinstate His $56 Billion Pay Package (2024)


Elon Musk Asks Telsa Shareholders To Reinstate His $56 Billion Pay Package? ›

Tesla asks shareholders to vote again on Musk's $56 billion payout. Tesla will ask shareholders to reapprove CEO Elon Musk's $56 billion pay package, months after a Delaware court found it deeply flawed and voided it. The company is also seeking to reincorporate in Texas as a direct result of the court decision.

Is Tesla doing layoffs? ›

The layoffs first started last month, when Tesla began laying off what was said to be at the time 10 percent of the company's global workforce of 140,000 people. The layoffs included Tesla's head of EV charging, Rebecca Tinucci, as well as her entire 500-person team.

How to vote as a Tesla shareholder? ›

To cast your vote online, you'll need to search for a specific email in your inbox, which may be in your spam folder (same email address that is associated with your broker account). Open the email and follow described instructions to vote. If you cannot locate this email, try voting by mail, phone or QR code.

What is Tesla's revenue? ›

Who owns 100% of Tesla? ›

The ownership structure of Tesla (TSLA) stock is a mix of institutional, retail and individual investors. Approximately 31.45% of the company's stock is owned by Institutional Investors, 13.64% is owned by Insiders and 54.91% is owned by Public Companies and Individual Investors.

Does Warren Buffett own Tesla stock? ›

Buffett is a longtime investor in China-based Tesla rival BYD (BYDDF) but so far has decided against investing in Tesla.

Why are employees leaving Tesla? ›

The job cuts, amounting to about 14,000 people, come as the company faces increasing competition and declining sales. The management changes and layoffs are a reminder of the unpredictability of Elon Musk, Tesla's chief executive, at a critical time for the company.

Are Tesla employees happy? ›

Tesla Reviews FAQs

Tesla has an overall rating of 3.6 out of 5, based on over 11,562 reviews left anonymously by employees. 60% of employees would recommend working at Tesla to a friend and 59% have a positive outlook for the business. This rating has been stable over the past 12 months.

Is it hard getting a job at Tesla? ›

Workers assemble cars on the line at the Tesla's factory in Fremont, California. Last year, Tesla received nearly 500,000 applications for just 2,500 open positions.

Who is Tesla's largest shareholder? ›

Musk, who is Tesla's largest individual shareholder with a 13% stake, grew more than $10 billion wealthier Wednesday morning thanks to the stock market gain, by far the biggest gain of any billionaire, according to Forbes' real-time tracker.

Can a normal person buy Tesla shares? ›

Anyone with a brokerage account can invest in Tesla stock. The company trades on the Nasdaq exchange under the stock ticker TSLA.

Who audits Tesla? ›

Who are the members of Tesla's Board of Directors? How can I contact Tesla's Board of Directors directly? Who are Tesla's independent auditors? Tesla's independent registered public accounting firm is PricewaterhouseCoopers LLP.

Does Tesla make a lot of profit? ›

By comparison, in 2022, it cost Tesla $49.6 billion to manufacture and sell $67.2 billion worth of electric vehicles, leaving a gross profit of $17.6 billion. That represented a gross profit margin of 26.2%, which declined to 17.1% in 2023, highlighting the effects of Tesla's price cuts.

How much does Tesla have in cash? ›

Cash on Hand as of March 2024 : $26.86 B

According to Tesla's latest financial reports the company has $26.86 B in cash and cash equivalents. A company's cash on hand also refered as cash/cash equivalents (CCE) and Short-term investments, is the amount of accessible money a business has.

Is Tesla struggling financially? ›

Against this backdrop, Tesla reported $1.1 billion in net income on $21 billion in revenue, down 9 percent from $23.3 billion the same time last year. The company's profits, once the envy of the auto industry, are at their lowest in six years thanks to rampant price cutting and slowing demand.

Does a Chinese company own Tesla? ›

Tesla, Inc. Unique among foreign automakers in China, the plant is wholly owned by Tesla and not operated as a joint venture with a Chinese company, the first time the government had allowed such an arrangement. While Tesla owns the factory, it does not own the land it is built on, as is typical in China.

Who is Amazon's biggest shareholder? ›

Who owns the most shares of Amazon (AMZN)? Jeffrey Bezos owns the most shares of Amazon (AMZN).

Who is the biggest shareholder of BlackRock? ›

BlackRock's largest institutional shareholders are Vanguard Group, BlackRock Fund Advisors, State Street Global Advisors, Temasek Holdings, and Bank of America. The company's largest individual shareholders include original BlackRock owners and founders Larry Fink and Susan L.

Can I buy shares of Tesla? ›

You can buy / sell Tesla, Inc. stocks after a simple registration process.

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