➡ Elon Musk’s $56 billion compensation package, which is based on Tesla’s stock performance, has been a topic of debate. Despite criticism, the package was approved as it incentivizes Musk to increase the company’s value, benefiting all shareholders. However, the package was challenged in court due to its size. Despite the volatility of Tesla’s stock, Musk met all the benchmarks set for him, resulting in significant wealth not just for him, but for all shareholders.
➡ Tesla’s shareholders are divided into two groups: individual investors who are happy with the company’s growth and large institutional investors who own about 17% of Tesla. These investors see Tesla not just as a car manufacturer, but as a technology and software engineering company. They believe in the company’s future in AI and robotics, which could account for 70% of Tesla’s value. Tesla’s success and high valuation are due to its unique approach and technology, which differentiates it from traditional car manufacturers.

I really wanted to talk about this one, because you know I always like to get to the money. So, Elon Musk’s $56 billion in compensation package. Now, let me preface this by saying that the number is going to change from platform to platform, day to day, because the compensation is based off of equity. It’s based off of his stock compensation. Elon Musk’s entire compensation, shout out to Lars Paul, entire compensation was based off of stock. Now, when they first approved this compensation, it was all based off of shareholders benefiting. So, a lot of people will look at Elon Musk’s compensation, or they’ll look at CEO pay, and they’ll say, nobody deserves to make that type of money! Well, what if you’re the person that actually started the company? What if you’re the person that’s at the helm of it? What if the performance of the company is largely tied to your compensation? So, if the company don’t do anything, then you don’t get paid.

Does that change? What if you get rich in the process? What if you’re incentivizing him to make you rich, and then you’re compensating him appropriately, depending on what his performance is? Does it make sense? Absolutely, it makes sense. Let me give a round of applause for Elon Musk. But his compensation was challenged by liberals and courts, because they were saying, well, it’s unfair, and there’s no way that somebody should make that type of money. But the board went ahead and improved it anyway. So, this was Elon Musk’s reaction to a $56 billion pay package.

It was ranging from 40 to 60, and all of this other type of stuff. And that’s largely because Tesla’s stock is pretty volatile, meaning that the value of the stock goes up and goes down, depending on whatever it is that’s happening within the market and the shareholders. But he met every single benchmark that they earmarked for him in order to be able to get this compensation, so everybody got rich in the process, not just Elon. But this was his reaction to getting his compensation package. Fourth, our stockholders have approved the re-domestication of Tesla from Delaware to Texas.

That ought to be artifacts. Fifth and finally, our stockholders have approved the ratification of the 100% performance-based stock option award to Elon Musk that was approved by stockholders in 2018. A lot of people say, why are everybody cheering for Elon Musk to get his $56 billion dollar compensation package? Because everybody else is a stockholder and a shareholder and what’s going on in Tesla. So, they all benefited as a result of it also. Welcome. Welcome to the Tesla shareholder meeting. And I just want to start off by saying, hot damn, I love you guys.

Yeah. We have the most awesome shareholder base. I mean, it’s just incredible. Any public company, it’s incredible. Wow. And we’ve got a great sort of shareholder meeting here. To recap the achievements of the company and tell you about where we’re going. And I think it’s incredible. I think we’re not just opening a new chapter for Tesla. We’re starting a new book. So, those of you who have been following Tesla closely understand you get it. A lot of people were saying the Cybertruck is fake. It’s never going to come out. And now we’re shipping a lot of Cybertrucks.

We hit a weekly record of 1300. And I think with the Cybertruck, it really is something special. People sometimes have different opinions on the Cybertruck. But if you really want to know if something is cool, if it’s a great product, show it to a kid. Okay. No filter. Okay. The kids got no filter, like a five-year-old, six-year-old, something like that. Or even three-year-old. And say, which car do you like? Cybertruck. So, that’s how you know. And it’s finally something that it just looks like the future. And it drives so well. It’s just a fantastic product.

Shout out to Elon Musk. One of the things that I tell people inside of Stock Club, make sure y’all tap into the Patreon. Link is in the description as well. It’s been to the top of the chat. One of the things that I talk about in Stock Club and one of the things that I look for when I’m looking at investing in a company, the eight things, right? All handpicked, christened, christened by, and the thing that we stand on fervently as investors is management. And we break it down inside of Stock Club.

Y’all need to go and rewatch some of the videos. We break it down about how important management is when it comes to investing or looking to invest in a particular stock, right? Different managers got different styles. Elon Musk and Tesla. Tesla is Elon Musk. Almost like Apple with Steve Jobs back in the 90s and in the 2000s when he wound up getting reinstated back into the company, right? And he’s done so much for the company, so much so that they’ve been able to eliminate the PR department so that they can ultimately just use his tweets in order to get out whatever it is.

And he changed the landscape of what you needed in order to really promote yourself in a promotional company. It is largely the most valuable stock in the world when it comes to automotive sectors. And so his management style is much different than Tim Cook’s, but it’s just as effective, if not more sometimes, depending on what it is that you want to use as far as a metric to measure what success looks like, because Tesla is largely a company that’s not even 25 years old. So here’s further information on what was going on as far as Elon Musk compensation, $56 billion compensation, before I share some more of my thoughts.

Check it out. Other news now, a high stakes vote tonight with Tesla shareholders just moments ago reinstating that controversial $56 billion pay package for CEO Elon Musk and moving the electric car makers in corporation to Texas. Tesla shares were up nearly 3% ahead of the expected news today, plus another point or so in after hours trading. The pay package was initially approved, you may recall, back in 2018 before it was struck down by a judge earlier this year. The vote today is not the last word. This is all still going to be decided in the courts.

Supporters of the compensation deal say Musk deserves it. He’s integral to Tesla’s future and he needs to be adequately compensated. It also comes as he’s facing a lawsuit from former employees of another one of his companies, SpaceX, alleging sexual harassment and retaliation. SpaceX did not immediately return a request for comment. NBC’s Brian Chung joins us now. And Brian, this is just a huge compensation package. And what is it based on? Remind us of that because this was, of course, before he made a promise that he would deliver. He delivered. The company exploded in growth, right? Yeah.

And it’s based on stock. And by the way, that’s why if you’re looking at some news articles right now in response to this compensation package just getting approved by shareholders in the last few minutes, you’re going to see different numbers float anywhere between $40 billion to $56 billion. And that’s because this compensation is basically entirely in stock and stock options. So it really depends on what frame you’re looking at for what the stock price was. And this is very much a volatile stock. Tesla stock year to date since January 1 is down about 26%.

Now, when it comes to the story about Musk’s compensation plan, we have to remember that, yes, shareholders did vote. Imagine investing in Tesla back in 2018. Imagine investing in Tesla back in 2014, 2010. Crazy. To approve this $56 billion as- And they announced several different stocks since then. Aated plan. But ultimately, it’s really not up to the shareholders. It’s up to the Delaware Chancery Court to approve legally this plan for that compensation plan to actually take place. Now, it is possible that they could strike it down. And it’s not just because of the eye-popping number.

It’s really because of the structure. The court is taking a look at whether or not the procedure is put in place and the way that this plan was put together based off including, for example, its board structure is legal. So that’s very much a big question here. But at least the shareholders today voting, at least, appearing overwhelmingly to support this package. Yeah, I mean, you’re right. The board, the court believes is a little too cozy with Elon Musk and gave him the sweetheart deal. Listen, we mentioned- If your pay package is tied to its performance base and it’s tied to the performance of the company itself, and the compensation package is 100% almost based off of that.

And he bet on himself and he won and he was successful as a result of it. I’m not really sure how you can debate with that. This is Ford’s former CEO, Mark Fields, with his assessment of it. And it’s no better way to get an assessment of something to get something away from your peers. Let’s bring in Mark Fields today, former CEO Ford and a current Qualcomm board member talk about this market. It’s great to have you. It is interesting. We are waiting for the final numbers, but shareholders rewarding this kind of dilution means they really do want them around.

Yeah, I mean, I said earlier this week, I think this is going to pass by a wide margin. And you know, Carl, you got two kinds of buckets of shareholders here, right? You have the individual or retail shareholder. And listen, anybody that’s held onto the stock for more than a year, they’re really happy. They’ve seen the value of their stock go up. And so they’re thinking, hey, this, you know, Musk has earned it. But in addition, you know, these retail investors really are captivated by the future that he lays out and they buy into it and they invest for that.

And then of course, you have the large institutional investors. And I think the biggest five institutional investors own about 17% of Tesla. And for them, I think this is a purely rational economic decision, because, you know, they have a fiduciary responsibility to, you know, the people that invest in their funds. And Musk has said, listen, if if I don’t get up to 25% of this company, I’m probably going to take a lot of the AI and robotic initiatives and take them outside Tesla. And that’s about 70% of the value of Tesla stock right now, according to Adam.

What do I say inside a stock club, when we evaluate an evaluation of a company or we study in the different industries that these different companies are playing in? And how important it is, as far as the eight things that we look for when we’re looking to invest in a company, we break it down based off of what industries they’re playing in and how they classify themselves as a company itself. So for example, a lot of people looked at Tesla and I said, well, Tesla is really an auto manufacturing company. So they compete against Toyota, General Motors, Volkswagen, and the like, right? I never looked at Tesla as an automotive company.

So my valuation of it is completely different. Well, why? Because even though a lot of their profits is generated as a result of being able to manufacture cars and trucks and vehicles, and then sell them to the general public, Tesla is really a technology company. It is not an auto manufacturer. It is a technology company. They view themselves at their core as a technology company, a software engineering company. And so because of that, you can’t look at them the same way and evaluate them the same way as you evaluate a Ford Motor Company, a Toyota, a Honda, so on and so forth.

Why? Because the proprietary technology that they’re using in order to continue to deploy and then make the company profitable itself, which is one of the reasons why they’re able to expand beyond just the cars themselves, while they’re spending so much money inside of AI, why they spend so much money continuing to develop the Tesla bot, which will ultimately be deployed in certain parts of their business, why automation is such a big deal inside of Tesla itself, why they have the power wall, why energy storage, they’re an energy storage company also on top of that.

Technology is at the core in the heart of what it is as a company. It’s not just selling vehicles. It’s eventually selling everything, but also leveraging that technology to make better vehicles and the lower costs. How we evaluate companies and how we evaluate stock and compensation is going to be different depending on what the company is and how it is that they’re viewing themselves, which is largely tied to management. And so when you see the success or when you see people investing or approving his pay package based off of what could happen, which is one of the reasons why Tesla was valued so much greater than every other company, it makes sense.

It absolutely makes sense, 100%. And so it depends. It absolutely depends. I think that he’s worth every single penny. And so him being able to leverage that and say, hey, listen, if I don’t get this percentage of the company, why would I continue to allow for the different things that we’re investing in and the different things that we plant that’s playing a role in the success at his company continue to do so? He basically got him over a rock in the higher place, but it’s beneficial for everybody. So they’re making a rational decision.

We don’t want to see them lead. We don’t want to see the stock tech. Right. Not getting overcharged by dealers. Man, I can’t, you know what? That’s my one knock against Mercedes. Phenomenal vehicle. Love the S-Class. It’s absolutely awesome. I love the S-580. It is a great vehicle. Awesome vehicle. One of the best vehicles I’ve ever owned. But my problem with that, with the company itself, is the dealers. Because nowhere, everywhere you try to go over the last four to five years, you try to buy S-Class, and they’re going to give you a dealer markup.

You try to buy a G-Wagon, they’re going to automatically give you a dealer markup. And that’s across the entire country. It don’t matter if you order one in Florida, here in Michigan, over to California, Texas, Ohio, everybody got a dealer markup. And it’s not even based off of the manufacturer’s price. And so he also revolutionized the idea that you can go directly to the manufacturer, purchase it, have it delivered to you, and so you cut out the middleman, which also cut out some of the costs. This goes, Mark. The COO of Ford’s EV unit is out.

They’re going to start expanding EVs to all dealers. The quote here is, the growth has slowed down and we’re getting into the tough innings. I wonder if you think most of the Tesla shareholder base understands that that business is going to be tough, and it’s about something else now. Yeah, I think a lot of the Tesla shareholders, they’re looking at the market, they’re saying, hey, it’s slowing down. They got more competitors. There’s a huge price war going on in China. And that’s been reflective in their slowing sales, their slowing growth. And a lot of the investors may be looking at Tesla and saying, the auto company, it’s kind of just like other auto companies, but all the things they’re doing around collecting data, all the talent that they have in the company around AI and talking about autonomous vehicles, which are down the road, it’s not going to be tomorrow.

And all these things they’re doing with robotics, those are huge addressable markets going forward. And I think that is what’s really driving these investors when they think about growth going forward for Tesla. So again, we make investments or we make decisions as shareholders, as stockholders, as people that are participating in the stock market. And remember, the stock market is not an opportunity for you to try to time the market. It’s not going into the stock market. The stock market is just a vehicle. It’s an opportunity for you to invest in things that you otherwise would not have had access to if it wasn’t a publicly traded company that then puts all of their data, their information, their performances online and available for you guys to see.

And you basically can get into it. And so I don’t want y’all to keep complaining about the companies and all of this. You can be a shareholder too. If you do your research, if you think it’s a viable company, but we also encourage you guys to make decisions based off of the long term. 10 years, 15 years from now, what does this company look like? Because we long-term investors. And so we always want to make sure that we deploy our capital and the assets that’s going to benefit us long-term. So shout out to all of the chasers in the building.

Shout out to the bag chasers. Shout out to the investors. Shout out to the people that’s running up the bag. [tr:trw].

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