In recent weeks, Tesla’s stock price has surged as investors rallied, sending the price into the stratosphere. Our recent articles covered why the stock surged but now we look into the man behind the scenes, Elon Musk. Interestingly, the billionaire CEO doesn’t get paid a salary, instead is paid options of Tesla’s stock. These options are used to incentivise management to ensure the company grows, both the market cap and the stock price. Due to Tesla’s recent success and investor confidence, Elon’s paycheck is about to get alot bigger. One of Tesla’s goals is to reach $100 billion in market cap for 6 months, which if the stock remains at $750 or more Elon will receive 1.7 million in stock options.
A longer-term goal released by Tesla is that if the market capitisation reaches $650 billion by 2028, Musk is eligible to 12 more bundles of share options. With most of Tesla’s growth in the EV industry still yet to come, it is safe to say Elon Musk is in a great position. Elon Musk is currently worth $40 billion and if Tesla does continue to grow at it’s current rate – Elon Musk will be worth over $200 billion according to Yahoo Finance.
What we can learn from Elon’s success?
Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
Charlie Munger (Warren Buffet’s “Right hand man”) quoted that you should
‘Never underestimate the man who overestimates himself’
when reffering to his thoughts on Elon Musk. This makes an interesting point, that the personality of Elon Musk is one with huge self-confidence in himself and Tesla in the future. His visionary ideas are seen as optimistic; however have proven pessimists wrong time and time again. In my opinion, management could learn a thing or two from Elon Musk. The incentive of stock options is usually used as a bonus to incentivise management to push the company further. However, Musk has used this incentive to drive the company to the point that Tesla is arguably the most profound companies in the world. So what can we learn – that incentive can sometimes be underestimated when we get comfortable. And don’t underestimate the person that always overestimates their success, because their vision just might prove you wrong.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Tyger Fitzpatrick, founder of YIG.