After a Delaware court invalidated Elon Musk’s all-stock pay in 2018, Tesla shareholders seem to be re-approving it. Although I don’t own Tesla shares and ineligible to vote on this issue, I do have a derivative investment based upon its share price in my portfolio. Thus, approving his pay would hurt me indirectly by diluting the current shareholders and causing the existing share prices to drop.
Putting aside my personal stake, I also view this package negatively for a different reason. The last time Musk sold his shares was to raise money to fund his purchase of Twitter for $44b in October of 2022. Since then, it lost an estimated 3/4s of its value, bouncing between $11b (financial papers’ estimates) and 20b (Elon’s claim this March). So let’s be generous and go with Elon’s $20b figure, resulting in a loss of $24b. Between that purchase date and today is roughly 20 months; Elon lost an average of $1.2b in Twitter’s value per month under his total ownership of the company.
How many business leaders, tycoons, etc. could lose $24b in 20 months and still have a job running a publicly traded company? And if you put another $56b in Elon’s hands, which shiny new toy will he purchase next and run it to the ground? Will he, for instance, buy 2/3 of OpenAI (worth $80b currently) and integrate its AI with Tesla and X? Do you, the consumer, have the confidence he won’t mess up the next company he buys with that $56b?
Elon has had a nice run with Tesla, and many early shareholders grew their investment portfolios. But it seems to me his previous success inflated his ego, and we’re stuck with the bad-Elon with the reverse-Midas touch. If he succeeds in getting that $56b payout, be scared of what he’ll do with that money.
Musings of an Amused Writer 