Topline
Tesla shares declined more than 3% on Friday, cutting CEO Elon Musk’s fortune by $10 billion after the automaker voted to approve a compensation plan that could award the world’s richest person $1 trillion over the next decade—a move derided by some analysts and shareholders.
An overwhelming majority of Tesla shareholders approved a payment plan that could be worth $1 trillion for the world’s wealthiest person.
Getty Images
Key Facts
Shares of Tesla fell 3.6% to around $429.70 as of Friday afternoon, continuing a two-day losing streak after the stock fell 3.5% on Thursday in the lead-up to Tesla’s shareholder vote.
More than 75% of Tesla shareholders voted Thursday in favor of the payment package for Musk, following opposition from some of the automaker’s largest equity holders.
The compensation deal awards Musk more than 423 million additional shares, raising his equity to roughly 25%, if Tesla achieves several goals over the next decade, some of which include Tesla’s market capitalization increasing to $8.5 trillion and Tesla selling 12 million more cars, among others.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, told Reuters the $1 trillion deal is “outrageous” and Tesla’s milestone goals are “Everest-sized,” but noted Musk would earn “nothing unless he creates staggering value” and “pulls off the unimaginable.”
AJ Bell’s investment director Russ Mould wrote Friday there are “logical reasons” the shareholder vote passed, given the lofty goals set for Tesla, while WedBush Securities analyst Dan Ives wrote there was “little to lose” for most shareholders in approving the deal, which Ives said solidified Musk as a “wartime CEO.”
Some shareholders opposed the vote: New York City Comptroller Brad Lander, who oversees Tesla shares held by the city’s pension, accused Tesla’s “crony board” of awarding the “ransom Musk wanted and now shareholders are on the hook for an indefensible compensation package.”
Forbes Valuation
Musk remains the world’s wealthiest person with a net worth estimated at $481.4 billion, following a drop of $10 billion (2%) on Tesla’s stock decline. He became the first person to be worth $500 billion and, before that, $400 billion earlier this year, as Tesla’s stock surge has propelled him further ahead of No. 2 Larry Ellison ($289.7 billion), whose net worth briefly approached Musk’s fortune after Oracle’s meteoric rise in September. Other losses were recorded among the world’s richest people, including Ellison, whose net worth fell $9.1 billion, in addition to declines for No. 3 Jeff Bezos (down $2 billion), No. 4 Larry Page ($5.6 billion), No. 5 Sergey Brin ($5.2 billion) and No. 6 Mark Zuckerberg ($2.6 billion).
Read More