Heist of the Century?

What does one make of Elon Musk's current wrangling for a $56 billion stock grant from Tesla?

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A quick internet search suggests Mr Musk owns currently about 13% of Tesla's stock, worth a little north of $70 billion at the close of trading on 7 June 2024.? By anyone's estimation (Croesus and Marcus Crassus excepted, perhaps) that is a staggering amount of wealth, so why does Tesla's board (notionally independent and required to represent the interests of all shareholders rather than the chosen few) believe Mr Musk's demand for an additional $56 billion stock award is a good deal for Tesla's owners?

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Investor's Business Daily offered a perspective, quoting the chair of Tesla's board, Ms Robyn Denholm: "If Tesla is to retain Elon's attention and motivate him to continue to devote his time, energy, ambition and vision to deliver comparable results in the future, we must stand by our deal," Denholm wrote to shareholders Wednesday.

Denholm added that with Musk being one of the richest people in the world, the deal is "obviously not about the money."

Excerpt from Investor's Business Daily in Italics

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Except that, if it's not about the money, what conceivable rationale is there for offering any person, or indeed any million people, this kind of money?? Most Americans, amongst the richest and most secure people on earth, would be happy to receive a 5-year lock-up grant of $56,000 and I suspect would be ready to work hard to earn it.

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So yes, let's not kid ourselves, of course it's about the money.

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And then, what happens next year, once this grant is approved?? Does this danse macabre repeat?? What's to stop the same pas-de-deux replaying every year?

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I'm a great admirer of everything Tesla has achieved.? Most fundamentally, the company has forced the auto industry to take seriously electrification and Mr Musk has probably done more than any other person to mitigate the calamitous consequences climate change is already delivering to us.? It's too bad that the auto firms in the US and EU were too resistant to change to seize the opportunity presented to them by Mr Musk, instead ceding the moment to Chinese firms.? But sometimes that's the way the biscuit breaks.

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Nevertheless, the notion that Mr Musk will take his toys and go home if he doesn't get his $56 billion is either bald-faced risible nonsense, or else a sign of CEO petulance that should have investors running for the hills and board members to their contingency plans labelled "replacements for Elon Musk."? Name me any other corporation (except perhaps Facebook) where this kind of tantrum would not lead to the immediate separation of the CEO/founder from the company, and I'll both be surprised and learn something.

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For all of his innovative brilliance at Tesla, Mr Musk is already at best an equivocator of desire (for the brand, of course).? Tesla's board needs to remember it is the shareholders' board, not a stooge for Mr Musk, and should act accordingly.? That means rejecting the obscene compensation demanded by Mr Musk, whose greatest legacies will certainly include the rapid electrification of passenger vehicles but may perhaps not (if he doesn't get out of the way soon) include Tesla as a market leader.

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The good news is that even without an extra and utterly needless $56 billion, Mr Musk will be fine financially, and Tesla will thrive with or without Mr Musk and especially, I am sorry to say, without him.? Meme stock pricing may vanish for Tesla if Mr Musk leaves, but at some point the loss of meme stock status and a move to rational stock pricing is inevitable, and now is a better time than when the EV market has multiple strong western competitors challenging Tesla for leadership.

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I expect the stock vote to pass, but it shouldn't and the result is unlikely to benefit anyone - perhaps, given the 5-year lock-up, not even Mr Musk.

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Disclosure:? The author holds no financial interest in any form whatsoever in Tesla or any other company owned or controlled by Mr Musk.