Elon Musk, the world’s richest man, is about to get a whole lot richer
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Elon Musk, the world’s richest man, is about to get a whole lot richer

He received four grants to buy 8.4 million Tesla shares in 2020. After paying the exercise price, those blocks stock options Each was $ 6.2 billion at Wednesday’s closing price. Of those options alone, $ 24.8 billion is worth more than Musk when it was valued a year ago Forbes counts its billionaire list, When he was ranked as the 31st richest man in the world.

2021 and 2022 may be almost attractive to him.

Of the company Annual financial filing This week revealed that Musk would probably get three additional option grants this year, each as big and as lucrative as those he got in 2020.

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.

of stock 743% growth in 2020 It made it the biggest winner of the stock market, as well as being one of the most valuable companies in the world. This has silenced most of the criticism they may have to face.

“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. ”

Tesla’s share price rise and his options to buy new shares have made Musk Richest person on the planetAccording to Bloomberg, beyond this Adventuress ()AMZN) founded by Jeff bezos.

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.

The choices he got last year came from one Second compensation package It was very heavy Approved by Tesla shareholders in 2018. This allows him to acquire options to purchase 101 million split-adjusted shares of stock for $ 70 each. Those options can come in 12 different, evenly sized traches.
If Tesla’s stock price keeps climbing, the options will have value. In late May, when Tesla confirmed that Musk had received the first block of options for 2020, they were “Only” value of $ 770 million After practice value. Today they are worth $ 6.2 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.

When Musk was recently asked on Twitter about the lack of plans for his own compensation package in 401 (k) plans, he said Reacted, “Everyone at Tesla gets stock. My comp is all stocks / options, which I don’t remove from the table. That’s what you’re missing.”

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.

Tesla's Dirty Little Secrets: Its Net Profit Does Not Come From Selling Cars

Although stock-based compensation does not withdraw cash from Tesla’s coffers, it does change the company’s profit picture.

Company reported Positive net income It grossed $ 721 million for the first time in 2020. Critics say its profit was less than the $ 1.6 billion it received from Tesla Regulatory credit sales For other vehicle manufacturers. They claim that the company has actually lost money on the sale of the car, and that it cannot depend on the revenue from the sale of those credits in the long term.

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.

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