Elon Musk, the world’s richest man, is about to get a whole lot richer
2021 and 2022 may be almost attractive to him.
At current prices, those three option trenches would be worth $ 18.6 billion.
Analysts are now predicting that Tesla’s 2022 financial results will reach similar heights, bringing Musk three additional blocks of options. Tesla could hit one of those profit targets in 2021, which would mean that Musk had to match four of the options he got last year.
Some investors are complaining about Musk’s salary.
“Tesla’s cachet is musk,” said Daniel Ives, technical analyst for Wesbush Securities. “Investors have not talked to an eyelash, because of Musk’s strategic direction, Tesla is on top of EV [electric vehicles] A mountain known in the golden age of EV. And they have put Tesla on the verge of being a trillion-dollar market cap company. ”
Did Musk really need any other options?
Unlike Musk, Bezos does not get stock options from Amazon, and he collected a relatively modest salary of $ 81,840 in 2019, along with security services valued at $ 1.6 million per year. But instead of benefiting from stock options or grants as most CEOs, he primarily benefits from the rise of his Amazon shares.
Musk equally owns 170 million Tesla shares, valued at approximately $ 137.2 billion, in addition to those existing shares with options to buy new ones. In fact, Musk dwarfs the value of the additional options already gained in 2020, with a gain of about $ 123 billion in shares’ value.
Musk, who bought a controlling stake in Tesla in 2004 when he was a private company for years before making his first car, receives no salary. Prior to his current lucrative compensation package, he had a prior version that paid him with options to purchase 22.9 million split-adjusted Tesla shares for a price of $ 6.24. Those options today are worth $ 18.3 billion.
Musk has not exercised any of his options. Expires are usually due to exercise or due to out of cash. Musk never sold shares of Tesla.
Cost for Tesla of choice
Those options come at the cost of Tesla, although this is a non-cash expense.
Stock-based compensation accounted for $ 1.7 billion at Tesla’s bottom line last year. The company did not disclose how much Musk had or how much stock it held for its other 70,750 employees.
The company provides a wide range of stock to its employees. Its filing stated that “our compensation philosophy for all our personnel reflects our startup origins, with an emphasis on equity-based rewards.”
But the same filing states that the company does not match its 401 (k) plans with employees’ contributions to cash or company stock.
Tesla said Musk got a lot of options, so much sooner than expected, that it caused a spike in stock-based compensation expense. In 2019, stock-based compensation was approximately $ 900 million.
Musk was not given any options in 2019, but some of the $ 900 million spent was booked by Tesla as it was believed that Musk would get options in early 2020.
Although stock-based compensation does not withdraw cash from Tesla’s coffers, it does change the company’s profit picture.
Without $ 1.7 billion in stock-based compensation, Tesla’s net income would outweigh the gains from the sale of those regulatory credits. And critics of Telsa did not claim that it could lose money selling cars.