Finally, it is essential to remember that maintaining this “real-life Tony Stark” persona is tremendously valuable to Musk. In addition to the ego gratification (and we have every reason to believe that Musk has a huge ego), this persona is worth hundreds of millions of dollars to Musk. More than any other factor, Musk’s mystique and his ability to generate hype have pumped the valuation of Tesla to its current stratospheric levels. Bloomberg put his total compensation from Tesla at just under $100 million a year. When Musk gets tons of coverage for claiming he's about to develop telepathy chips for your brain or build a giant subterranean slot car race track under Los Angeles, he keeps that mystique going. Eventually groundless proposals and questionable-to-false boasts will wear away at his reputation, but unless the vast majority of journalists become less credulous and more professional in the very near future, that damage won’t come soon enough to prevent Musk from earning another billion dollars or so from the hype.
2. Since I wrote that, Musk made a big bet on the stock price and it has worked out very well for him.
Tesla confirmed that CEO Elon Musk earned the first tranche of his massive incentive payout, in a document filed with the Securities and Exchange Commission on Thursday.
The tranche is comprised of about 1.7 million shares of Tesla, and would be valued around $775 million based on Thursday’s closing market value. Shares in Tesla closed at $805.81 on Thursday, and the options have a strike price of $350.02.
Thursday’s filing, which also set a date of July 7 for the company’s annual shareholders meeting, said: “As of the date of this proxy statement, one of the 12 tranches under this award has vested and become exercisable, subject to Mr. Musk’s payment of the exercise price of $350.02 per share and the minimum five-year holding period generally applicable to any shares he acquires upon exercise.” It is not clear if Musk has yet exercised the options.
3. With this in mind, the recent surge looks a bit convenient.
As you can see from the 5-year chart below, Tesla's stock didn't do much for quite a while then, about a year ago, it more than quadrupled in about three quarters.
It's useful to compare this to the stock performance of the far larger and more profitable GM.
4. These incentive plans can incentivize some bad behavior.
Jack Welch demonstrated how easy it was to nudge the books to create the profitability picture Wall Street likes. Running up a stock's value isn't that dissimilar, and there are lots of questions about Tesla's books. Add to that the power of the company's narrative, the cult of personality around Musk, and investors' willingness to reward even the distant promise of viability from any business that can label itself a tech company (we live in the WeWork age).
When Musk compares covid-19 to a cold, pushes miracle cures or lobbies hard for a quick end to the lockdown, it's important to remember...
5. What's good for Tesla isn't necessarily good for America.
But that satellite launch was cool.
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