Having just received a bonus of nearly $ 90 billion, Tesla is about to ‘give’ Elon Musk another ‘terrible’ compensation package?
- Tram Ho
CEO Elon Musk does not receive any salary or bonus, but only receives stock options of Tesla. However, the bonus package from 2018 including Musk’s options is about to “drain up”. Courtney Yu, research director at Equilar, a company that researches corporate rewards, said the stock options package has unprecedented profitability for any business.
The 93.9 million options Musk has received since 2018 are worth $86.8 billion as of Friday after taking into account the exercise price. Last week, Musk received an additional 25.3 million options thanks to Tesla’s record-high profit in the first quarter. In addition, he may soon receive another 8.4 million options, possibly after the announcement. The company publishes its financial statements for the second or third quarter (based on analysts’ forecasts).
But, the 8.4 million options — worth billions of dollars — are a relatively small fraction of the entire bonus package that Musk is likely to receive. When receiving the above options, he will own a total of 101 million options under the 2018 bonus package. The question is, will this billionaire receive any more bonuses? Maybe tens of millions of other options?
During last Wednesday’s earnings call, Musk didn’t respond to that question. He just said: “There is no discussion about a new bonus for me yet.”
Not all tech CEOs get the same options as Musk
Unlike Musk, some tech billionaires don’t receive stock options. For example, Jeff Bezos and Mark Zuckerberg have not received any bonus packages or stock options since Amazon and Meta went public in 1997 and 2012. Moreover, their salaries are… not much. Bezos received a salary of $81,000 a year when he was CEO of Amazon, while Zuckerberg received a salary of $1 a year for most of the past decade. Meanwhile, they are rich thanks to the value of the shares they have held since the company “listed”.
Much of Musk’s net worth, an estimated $270 billion, comes from the rise in Tesla shares. However, he has also regularly received stock options bonuses since 2009 – a year before the company’s IPO.
He exercised many of those options before expiration. Most of his current options come from the 2018 salary and bonus package.
Wall Street predicts Musk will receive more rewards
Many analysts believe it is only a matter of time before Tesla offers another stock option bonus for Musk.
Alex Potter – analyst at Piper Sandler & Co., said that Musk’s previous bonus packages seem to be quite profitable. Furthermore, 81% of Tesla shareholders who voted on Musk’s bonus in 2018 have now approved another one. Other analysts believe that a new bonus package will be launched.
Gene Munster, executive chairman at Loup Ventures, said: “Overall, Tesla’s board is going to restart that plan and with the same scale and huge value as before. Elon ‘thinking big’ and he pursued a lot of new fields, building big businesses like automation and robotics.”
A new options bonus package for Musk could revive confidence with investors worried that he might lose focus with Tesla as he runs SpaceX and prepares for an acquisition, analysts say. capture Twitter.
Dan Ives, a technology analyst at Wedbush Securities, said: “Tesla investors ‘sleep better’ when they know he has a bonus package of 5-10 years.”
Does Musk need a bonus package to focus more on Tesla?
It’s hard to imagine someone as rich and dedicated to Teska as Musk has little incentive to spend time at the company just for the money. And if money is a driving factor, the 265.5 million shares and options he holds will give him everything he needs.
“He’s always been financially motivated to push Tesla to do better,” said Equilar’s Yu.
However, supporters of Tesla’s new bonus package to Musk say it will clear doubts about Musk’s level of focus with the electric car company, since he turned his attention to Twitter. “Whether he’s committed to Tesla with or without bonus packages, investors want him to get a new paycheck,” Ives said.
Musk’s receipt of a new bonus package will draw criticism from those who believe that CEOs are being overpaid. However, it is Tesla’s shareholders who make the decisions.
Ives said: “Musk has become a hero and villain in everyone’s eyes. A new bonus package will make more people unhappy with him, or someone will be relieved that he is still attached. bundle with Tesla.”
Source : Genk