The lottery number last week was US$56bn, the compensation Tesla will pay to Elon Musk. It was based on 303.9mn 10-year stock options granted in 2018 (or 1% in 12 tranches). To secure the options, the market cap must hit S$650bn, revenue US$175bn or adj. EBITDA US$14bn. Arguments for the compensation were that Elon should be paid based on what was already agreed and he could leave the company. Tesla has performed remarkably since 2017, where revenue has compounded 42% over 6 years. Shareholders benefited from the 10x surge in market cap from US$52bn in Dec 2017 but not the earnings. From 2018, net profit was a cumulative US$32bn. In fact, if we remove Musk's 20.5% stake, minority shareholders are paying him double the US$25bn net profit generated for them. Imagine a CEO who pays himself every cent of the profit earned by the company, plus you still owe him an equivalent sum. On the threat of Musk leaving Tesla, we are not sure he will walk away from his 20.5% stake (411mn shares and 304mn options) worth US$127bn. He already pledged US$42bn worth as collateral for a personal loan.
Credits: Phillips Securities
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
- JesseBerkeley·06-18Nice work, informative piece! [Great]LikeReport
- BotakGuy·06-18Wow a lot of $LikeReport