Musk’s $46 Billion Payday Comes as Tesla Completes Texas Move

• Tesla shareholders have voted to approve a “pay package” that will hand Elon Musk a total of 20% of the automaker’s shares, up from the 13% he had already held. That amounts to more than $40 billion.
  

• Musk always has run Tesla for free, in that he took no salary as its CEO, which is why the company’s market cap is so important to his wealth. Tesla’s first full-year profit came in 2020, when it netted $721 million.

• Wall Street investors have put a lot of faith in Musk and Tesla’s autonomous technology, even as the National Highway Traffic Safety Administration continues its investigation of Full Self Driving (or FSD, formerly Autopilot).

Elon Musk, the crafty tech businessman in charge of Tesla, SpaceX, and X, used his X social-media platform to tweet ahead of Thursday’s Tesla shareholder vote that they had approved his “pay package,” handing him a total of 20% of the automaker’s—sorry, tech company’s—shares, up from the 13% he had already held.

Delaware Court of Chancery Judge Kathaleen St. J. McCormick had rejected that pay package as “excessive,” but shareholders fixed that too, voting with Musk’s desire to move Tesla’s headquarters from Delaware, the corporation-friendly state, to Texas, the land of free-flowing oil. Tesla moved its HQ from California to Texas in 2021, but now the corporate entity will move from Delaware to Texas, too.

By the time the ballot-dust had settled late Thursday, 72% of Tesla’s shareholders approved Musk’s pay package, The New York Times reports.

It is worth somewhere between $45 billion and $50 billion to him, according to various news outlets, and therein lies the point: Musk’s early Thursday tweet surely helped push Tesla’s stock price up by 2.92% for the day, adding to his haul.

A vote under three-quarters is a bit short of a ringing endorsement, however. Judge McCormick in her January ruling “agreed with a group of disenchanted Tesla shareholders who contended in a lawsuit that (Musk’s) 2018 pay package was wildly excessive.”

A day earlier, The Atlantic estimated Musk’s haul at a somewhat more specific $46 billion. Conveniently, that’s just a bit more than the $44 billion Musk spent of his own cash and credit to take over Twitter in April 2022 and proceeded to gut its San Francisco office of employees, including its “free speech” gatekeepers.

After he purchased the letter previously known as Twitter, Musk went from being called “the world’s richest” to “one of the world’s richest men” by various business publications.

Musk always has run Tesla for free, in that he took no salary as its CEO, which is why the company’s market cap is so important to his wealth. Tesla’s first full-year profit came in 2020, when it netted $721 million, but three years earlier—while losing money—its stock passed General Motors’ market cap to become the US’ most valuable automaker.

By the time it finally earned a full-year profit, Tesla was worth more than GM, Ford Motor Company, and pre-Stellantis Fiat Chrysler combined.

From Musk’s 2018 pay package in which he was to receive 1% of Tesla’s shares each time he helped the stock performance reach specific milestones, he reached 20% until it was struck down in the Delaware court last January, according to Reuters.

Wall Street analysts were already smitten with Tesla after it launched the Model S in 2012. In explaining the run-up to Tesla passing GM’s market cap in 2017, one analyst told me Wall Street expected Musk’s tech company would dominate the electric-vehicle market in the coming decade or two.

The implication was that plodding, old-fashioned “legacy” automakers would be decades behind Tesla in adopting electric power—never mind the Nissan Leaf and GM’s EV-1, to name two.

Even as the entire industry suffers a slowdown in EV demand for the last three quarters or so, their growing popularity also has forced Tesla to cut prices on its most affordable vehicles: Models 3 and Y.

Earlier this year, Musk inexplicably laid off about 500 members of Tesla’s Supercharger team—most of the employees of what is regarded as the company’s best product in terms of reliability and convenience.

These layoffs came as most legacy automakers are switching to Tesla’s Supercharger J3400 standard and as new and competing charging companies try to expand their networks across the nation.

Those automakers and charging companies have no one to call at Tesla for tech questions, although some of them apparently have scooped up laid off Supercharger software engineers.

Wall Street investors have put a lot of faith in Musk and Tesla’s autonomous technology, even as the National Highway Traffic Safety Administration continues its investigation of Full Self Driving (or FSD, which offers stepped up capability beyond Tesla’s Autopilot system).

While under fire in the US with the ongoing NHTSA inquiry, Tesla has signed a deal with Baidu to provide navigation services to allow its vehicles to run FSD on Chinese streets.

Musk has announced Tesla will introduce its robotaxi, the subject of even more enthusiasm by Wall Street’s fanboys and fangirls, on August 8.

According to the Times, one such fangirl, Cathie Wood, who runs the firm Ark Invest, believes the robotaxi “could lift Tesla’s shares to $2,600” from Friday’s price just under $180, which would make Musk the world’s richest man nearly 15-times over.

Does Elon Musk deserve a payday exceeding $40 billion? Please comment below.