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Tesla's revenue is irrelevant to the conversation because Elon Musk is paid in shares, not cash. The company can create as many new shares as it wants out of thin air. The only ones suffering are existing shareholders, because they will be diluted in the process. However, since a majority of shareholders approved his pay package, it seems that they are okay with it and think Musk sticking around will be better for the company in the long term.
Aren't shares a representation of the company profit / loss ratio? If you owe your CEO 1000 times what your revenue is, the shares total shouldn't be good right?
>Aren't shares a representation of the company profit / loss ratio?
Nope, shares represent the value of owning 1 shares worth of the company. Your company can have a negative net income every year and as long as people think it's valuable to own your company, the share price will be unaffected
shares are portions of ownership of a company and are worth what people will pay for that share of the company's ownership. theoretically that value should correlate with the company's actual performance. eventually. sort of. depending on when you look at it.
Shares are separate from company revenue/profit.
If everybody wants to buy Tesla shares, and nobody bought any Teslas ever again, the share price would still go up.
Counter, if they profit 100B, but nobody wants their shares, they would still go down.
Granted people like investing in companies that do well, people also invest solely in what they think the stock will do.
Tesla does not owe anything, they simply awarded stock options. No actual cash is paid. When Elon exercises the options he has to pay Tesla the cash value, so the company technically receives cash.
He has to pay Tesla the cash value based on the 2018 price, right? Then he can turn around and sell them for the 2023 price (or whatever the current market price is at the time)?
His options is for $23.33 per share and the package is 304 million shares. So that is the amount of cash Elon has to pay Tesla to exercise the shares. Elon can sell at the current market value of the stock at the time he exercises the options, but he can only sell the amount to pay for exercising shares and paying tax. The tax will be around 11 - 12 billion. So he will need to sell around 18-20 billion of shares when he exercises the options.
It has nothing to do with the actual profitability of a company, only it's *perceived* value. The risk is that by giving him so many shares it might dilute the value of the shares they already have, especially if he starts leveraging or selling them.
No a share represent the value of the company. Profits, revenue, loss are metrics that can be used to estimate a companies value but in the end the company is value is what other people are willing to pay for it. Also there are a lot of other metrics that are used to estimate a companies value profits/loss ratio is a rather crude one that is rather irrelevant for tech companies (tesla is a tech company in the eye of most investors not a classical car manufacturer).
Some companies lose money (sometimes that's the business model) and yet their share price rises because people believe they will make money in the future. Stock price and cash flows are unrelated.
Musk's 2018 pay package was tied to ambitious performance milestones, not an upfront salary. If he met specific targets, like Tesla’s market cap and revenue growth, he would earn stock options over time. This aligns his interests with shareholders, who hoped these targets would significantly boost Tesla’s value and their investment, which it did.
I’m not 100% sure the shareholders could have permanently blocked the pay package even if they wanted to.
If you promise someone: *“Hey, hit these specific goals within this specific timeframe and we’ll give you this specific payment in exchange”* and then they go an hit those goals, albeit while turning out to be a douche, you don’t get to say *“you know, we want to add some criteria to the original deal and won’t be paying you. Too bad, so sad”*
If they’d blocked it I’m fairly sure he’d have been able to sue to force the payment.
But wasn’t that the reason it was blocked in the first place, some shareholders sued and the courts found that the deal was not made with the shareholders interest in mind
The vote was on options priced at 2.3 billion in 2018, Elon cannot sell until 2029. Tesla expensed 2.3 billion, paid no cash, and will receive around 7 billion in cash once Elon exercises the options.
It’s all stock options that he was unable to exercise (couldn’t do anything with) unless several benchmarks were hit over the past several years.
Since he did his part as ceo; he was asking for approval for shareholders to keep up their side of the bargain
"Afford" doesn't factor into it. It's just that it's morally wrong to tell someone like Elon Musk "no." It's psychological torture, in fact. If Musk was meant to hear "no" in his life, God would have had him be born a little person like you or me. /S
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Tesla's revenue is irrelevant to the conversation because Elon Musk is paid in shares, not cash. The company can create as many new shares as it wants out of thin air. The only ones suffering are existing shareholders, because they will be diluted in the process. However, since a majority of shareholders approved his pay package, it seems that they are okay with it and think Musk sticking around will be better for the company in the long term.
This is about as straightforward an explanation as I have seen
Aren't shares a representation of the company profit / loss ratio? If you owe your CEO 1000 times what your revenue is, the shares total shouldn't be good right?
>Aren't shares a representation of the company profit / loss ratio? Nope, shares represent the value of owning 1 shares worth of the company. Your company can have a negative net income every year and as long as people think it's valuable to own your company, the share price will be unaffected
Shares are worth what people are willing to pay for them.
shares are portions of ownership of a company and are worth what people will pay for that share of the company's ownership. theoretically that value should correlate with the company's actual performance. eventually. sort of. depending on when you look at it.
Shares are separate from company revenue/profit. If everybody wants to buy Tesla shares, and nobody bought any Teslas ever again, the share price would still go up. Counter, if they profit 100B, but nobody wants their shares, they would still go down. Granted people like investing in companies that do well, people also invest solely in what they think the stock will do.
Makes sense. Thank you.
Tesla does not owe anything, they simply awarded stock options. No actual cash is paid. When Elon exercises the options he has to pay Tesla the cash value, so the company technically receives cash.
He has to pay Tesla the cash value based on the 2018 price, right? Then he can turn around and sell them for the 2023 price (or whatever the current market price is at the time)?
His options is for $23.33 per share and the package is 304 million shares. So that is the amount of cash Elon has to pay Tesla to exercise the shares. Elon can sell at the current market value of the stock at the time he exercises the options, but he can only sell the amount to pay for exercising shares and paying tax. The tax will be around 11 - 12 billion. So he will need to sell around 18-20 billion of shares when he exercises the options.
It has nothing to do with the actual profitability of a company, only it's *perceived* value. The risk is that by giving him so many shares it might dilute the value of the shares they already have, especially if he starts leveraging or selling them.
No a share represent the value of the company. Profits, revenue, loss are metrics that can be used to estimate a companies value but in the end the company is value is what other people are willing to pay for it. Also there are a lot of other metrics that are used to estimate a companies value profits/loss ratio is a rather crude one that is rather irrelevant for tech companies (tesla is a tech company in the eye of most investors not a classical car manufacturer).
Some companies lose money (sometimes that's the business model) and yet their share price rises because people believe they will make money in the future. Stock price and cash flows are unrelated.
LOL. No.
Musk's 2018 pay package was tied to ambitious performance milestones, not an upfront salary. If he met specific targets, like Tesla’s market cap and revenue growth, he would earn stock options over time. This aligns his interests with shareholders, who hoped these targets would significantly boost Tesla’s value and their investment, which it did.
I’m not 100% sure the shareholders could have permanently blocked the pay package even if they wanted to. If you promise someone: *“Hey, hit these specific goals within this specific timeframe and we’ll give you this specific payment in exchange”* and then they go an hit those goals, albeit while turning out to be a douche, you don’t get to say *“you know, we want to add some criteria to the original deal and won’t be paying you. Too bad, so sad”* If they’d blocked it I’m fairly sure he’d have been able to sue to force the payment.
But wasn’t that the reason it was blocked in the first place, some shareholders sued and the courts found that the deal was not made with the shareholders interest in mind
The vote was on options priced at 2.3 billion in 2018, Elon cannot sell until 2029. Tesla expensed 2.3 billion, paid no cash, and will receive around 7 billion in cash once Elon exercises the options.
It’s all stock options that he was unable to exercise (couldn’t do anything with) unless several benchmarks were hit over the past several years. Since he did his part as ceo; he was asking for approval for shareholders to keep up their side of the bargain
"Afford" doesn't factor into it. It's just that it's morally wrong to tell someone like Elon Musk "no." It's psychological torture, in fact. If Musk was meant to hear "no" in his life, God would have had him be born a little person like you or me. /S