KEY FACTS

• First unveiled in 2018 and now worth just shy of $50 billion after accounting for cost of exercising, Musk’s compensation package (a tranche of incentive-based stock options), will go up to shareholder vote at the company’s annual meeting next Thursday, as Musk attempts to reverse a January decision from a Delaware judge striking down the award as Tesla concurrently seeks to switch its state of incorporation from Delaware to Texas.
• The pay package, which would lift Musk’s equity in Tesla from 13% to 22%, quite close to the 25% voting rights threshold Musk has floated to entirely develop artificial intelligence at the company, will crucially go to vote soon after Musk secured $6 billion in funding for his generative AI startup xAI and after he reportedly diverted Nvidia’s AI semiconductor chips from Tesla to his social media platform X and his AI company xAI.
• “However ill-designed the scheme was, we believe denying Elon Musk his past compensation would look like misplaced buyers remorse,” according to Jefferies analysts, summarizing the general notion among Tesla experts that the company requires to find a way to keep Elon Musk, who is inseparably linked to Tesla’s success, engaged.
• Tesla’s board offered its loud support of the package last month, even though several shareholder advisory groups, including Institutional Shareholder Services and Glass Lewis, have counselled investors to swat down the bonus.

CRUCIAL QUOTE

Apart from the vote on Musk’s pay package, “the challenge for the board is to find ways to reward Elon Musk as tech innovator and stop punishing most other shareholders for erratic execution,” according to the Jefferies group.

FORBES VALUATION

Even without his colossal pay package, Musk is the wealthiest man in the world, worth some $208 billion, according to Forbes’ latest estimates. Tesla no longer accounts for bulk of Elon Musk’s net worth, as his stake in the automaker is worth $72 billion (roughly a third of his fortune). Equity in his non-Tesla private companies encompasses most of the rest of Elon’s fortune. His 42% stake in SpaceX (his aerospace company) is worth about $75 billion, 60% stake in xAI (his AI company) is worth approximately $14.4 billion and 74% stake in X (his social media firm) is worth about $7 billion, while he also has lower valued equity in transportation and brain startups Boring Companyand Neuralink.

BIG NUMBER

48%. That’s how much lesser Tesla’s net income was during the first quarter of 2024 compared to 2023’s first quarter, marking the third successive quarter of negative annual profit growth.Declining earnings is the last thing investors in a growth-focused company like Tesla like to see.