Investment firm Gerber Kawasaki’s co-founder, Ross Gerber, has expressed concerns that Tesla Inc. CEO Elon Musk’s trillion-dollar pay package could lead to a significant dilution of the company’s share value. According to Gerber, the stock dilution would be equivalent to $275 million per day if the pay package is approved.
Dilution Concerns
Gerber’s concerns are shared by Norway’s sovereign wealth fund, Norges Bank Investment Management (NBIM), which holds a 1.12% stake in Tesla worth $17 billion. The fund has announced its intention to vote against the pay package, citing concerns over the total size of the award, dilution, and lack of mitigation of key person risk. Proxy advisory firm Glass Lewis has also warned of a risk of “significant dilution” with the pay package.
Package Details
The pay package outlines that Musk would receive tranches of stock if certain milestones are met. However, it has been reported that Musk could still pocket billions of dollars from the pay package by hitting some of the easier milestones, even if Tesla does not reach every single goal outlined by the Board.
Criticism and Support
The pay package has received criticism from several parties, including the California Public Employees Retirement System (CalPERS), which holds over $2.3 billion in Tesla shares. CalPERS has announced its intention to vote against the pay package, citing concerns over the concentration of power. However, the package has also received support from funds like the Florida Retirement System’s State Board of Administration and investment firm Charles Schwab.
Industry Expert Opinion
ARK Invest CEO Cathie Wood has predicted that the package would win “decisively” at the shareholder meeting. Wood’s support for the package is based on her confidence in Musk’s ability to drive growth and innovation at Tesla.
Tesla Stock Performance
Tesla scores well on Momentum and Quality metrics, offering satisfactory Growth, but poor Value. The company has a favorable price trend in the Short, Medium, and Long term.
Conclusion
The debate over Elon Musk’s trillion-dollar pay package continues, with concerns over stock dilution and concentration of power pitted against support from industry experts and investors. As the shareholder meeting approaches, all eyes will be on the outcome and its potential impact on Tesla’s stock performance.