The 93.9 million options Musk has received so far from that package were worth $86.8 billion as of Friday’s close, after taking into account the exercise price.
But those 8.4 million options, worth billions, are a relatively small part of what Musk might get in the end. Once he gets those extra options, he’ll have received the 101 million split adjusted options that were part of the 2018 pay package. The question should be whether he’ll get more options, perhaps tens of millions more.
Musk dodged a question about this payday during a call with investors on Wednesday, saying simply, “There are no discussions currently underway for my additional compensation.”
But this does not mean that he will not be offered this type of payment in the future.
Not all CTOs get choices
Some tech billionaires have done just fine without stock options.
They have benefited from the massive appreciation of the stock they own since their companies went public.
He exercised many of these options because they were about to expire. Practically all his remaining options come from him Payment plan 2018.
Wall Street wants more musk options
Many analysts believe it’s only a matter of time before Tesla comes up with another package of options for Musk.
Alex Potter, an analyst at Piper Sandler & Co., who asked Musk about a possible new compensation package on Wednesday’s investor call, took a moment to say the previous package “appeared to be working well.”
It was approved by 81% of Tesla shareholders who voted on Musk’s wage package in 2018. Other analysts believe the new package will be beneficial for the company, as well as for Musk.
“Eventually, the board will reload Elon’s plan,” said Jane Munster, managing partner at Loup Ventures. “And it’s going to be a huge plan, just like the previous one.” “Elon is thinking big, and he has huge new markets to pursue and build great businesses including autonomy and robotics.”
Is there a downside in PR to flooding the world’s richest person with additional options that could add tens, if not hundreds of billions, to his fortune?
“Elon is the richest person in the world, and he can still attract hardworking people,” Munsger said. “These people are going to cheer him up pretty much with a huge new comp package.”
“This will make Tesla investors sleep better at night knowing he has a five to ten-year corporate package signed, sealed and delivered,” said Dan Ives, technical analyst at Wedbush Securities.
Does Musk need more options to look after Tesla?
It’s hard to imagine someone as wealthy as Musk, and as passionate as Tesla, being motivated to spend more or less time at the company depending on what they get in their next compensation package. And if money is a motivating factor, the value of the 265.5 million shares and current Tesla options should provide all the incentive he needs.
“He really does have a financial drive to keep Tesla doing well,” said Equilar’s Yu.
“While his DNA won’t change whether he has new Tesla options or not, Street wants him to have another comp,” Ives said.
There are costs to Tesla in connection with giving Musk additional options, although it is a non-cash compensation. The estimated accounting value of those options is shown as an expense in its earnings statement. Last year, Tesla booked $571 million in expenses related to Musk’s 2018 salary package alone. If he doesn’t get a new one, those expenses will disappear from the profit and loss statement.
And while Musk’s new package is sure to be criticized by those who think CEOs are being paid too much, Tesla shareholders, and no one else, will make that decision.
“Musk is really either a hero or a villain in people’s eyes,” Ives said. “The new package will either make people hate him more, or feel good about him staying put.”
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