Musk's $29 bln handout makes him harder to replace
The first problem is that Tesla's 'Technoking' CEO wants 25% voting control of the company. The 2018 award would have lifted his stake over 20%. But that payday has been in legal limbo since Delaware judge Kathleen McCormick last year ordered it be rescinded due to the hopelessly conflicted process by which the board made its decision. The latest 'interim' payment, which will effectively be canceled if Tesla succeeds in getting the original reinstated, merely increases Musk's ownership to around 16%. After more than a year of struggle, the question of his next incentive package remains unresolved.
The second issue is that the tech tycoon's value to his company is increasingly double-edged. Musk once attracted a fervent following among technologists and the car-buying public. Yet brand loyalty among Tesla owners has plummeted since he jumped into electoral politics – first backing President Donald Trump and then falling out with him – Reuters reported based on S&P Global Mobility data.
Even so, Musk retains a unique aura for Tesla investors. How else to explain a stock trading at 148 times expected earnings over the next 12 months, according to LSEG data, when financial results are slumping?
He has pushed a strategy that de-emphasizes the humdrum business of selling actual cars, swapping out a path-breaking, truly cheap vehicle plan for a cut-rate model that cannot profitably hit a sub-$30,000 price. Instead, Musk now talks about Tesla building millions of humanoid robots or self-driving taxis even as it trails Google's (GOOGL.O), opens new tab Waymo and other rivals. Every decision - from cutting the sensors in each car to incorporating language model Grok - leads to more dependence on an artificial intelligence push that depends on raw scale. Here, Musk is among a select group of AI pioneers who can collect enough powerful semiconductors and push past pesky regulations.
Musk has even proposed that Tesla invest in his xAI business, potentially tying the carmaker even more tightly to the rest of his empire. As the standard business of selling automobiles is pushed further to the background, the company depends ever more on the peculiar whims of its CEO. His extracurricular activities - from xAI to rocket-maker SpaceX to political activism - seem likely to continue; investors in another of his companies were recently warned, opens new tab that Musk may re-enter the electoral arena. All the new pay package does is cement this reality, while desperately trying to rekindle the old magic.
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