Tesla, Inc. (NASDAQ:TSLA) $2.6 Billion Compensation Package?

Tesla, Inc. (NASDAQ:TSLA) $2.6 Billion Compensation Package?

Tesla, Inc. (NASDAQ:TSLA) $2.6 Billion Compensation Package?

If there are contenders for tech titan poster child, Elon Musk is clearly leading the pack. Unlike almost any other CEO in recent memory, Musk embodies the spirit of innovation, vision, risk-taking, fearlessness, and unbridled ambition while also having the popular appeal of a rock star–with ambitions to play on an interplanetary stage.

So what is all of that worth? Only what those who decide his salary say it’s worth.

In this case, it may be worth $2.6 billion over the next 10 years.

Sounds ridiculous, right? $2.6 billion to be CEO of any company is outrageous. Well, not exactly.

First off, America’s four highest paid CEOs already bring in about $100 million each in yearly compensation. Musk’s package works out to $260 million per year. Certainly excessive when compared to even the best compensated CEO today, Alphabet CEO Sundar Pichai, who clocks in at just over $100 million per year.

However, Musk’s current compensation (excluding the $20 billion of stock he owns in Tesla) is just over $45,000 a year! But even if you take that into consideration, along with the risks Musk took to get Tesla to where it is today–nearly going bankrupt and borrowing money from friends early in Tesla’s history–$2.6 billion still seems excessive by almost any measure.

Here’s a simple explanation of why it’s not.

The $2.6 billion is predicated on Tesla’s market cap increasing from about $56 billion today to $650 billion in 10 years. That’s a greater market cap than that of Amazon, 10 times the market cap of General Motors, and about a 10 times increase for Tesla over 10 years. (By the way, Musk’s $2.6 billion is tied to hard metrics, meaning that he could end up with nothing if certain milestones are not reached.)

But here’s where it gets interesting.

At $650 billion, Musk’s $2.6 billion is about 0.4 percent. Now, as a comparison, let’s say you started a company that’s worth $1 million today. In 10 years, it will be worth $10 million. What are you worth as CEO of that company? Using Musk’s numbers, (0.4 percent of $10 million) the answer would be $40,000 over 10 years, or $4,000/year. Would you consider that fair compensation?

I’m not saying that the analogy is perfect. It’s not–$2.6 billion is still an absurdly large number. But the shift in perspective changes things a bit.

To Musk’s credit, when asked about the compensation package for a New York Times article, his response was:

“None of it is intended for dynastic wealth creation,” he said. “The reason that it’s important to me personally is that there’s some pretty big things that I want to do.”

“I want to contribute as much as possible to humanity becoming a multi-planet species,” he said, alluding to a goal he has talked about often, including having people live on Mars. “That obviously requires a certain amount of capital.”

Many people believe that compensation should be directly tied to risks taken and value created. They would argue that anyone who wants to argue with that is simply being naive or ignoring the most basic precepts of capitalism.

On the other hand, there is no explanation that will be acceptable to the other group who see this as nothing but excessive.

Only time will tell what Musk is worth.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 290.57.

The projected lower bound is: 243.26.

The projected closing price is: 266.91.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with TESLA INC), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 39.4467. This is not an overbought or oversold reading. The last signal was a sell 6 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 42.62. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 148 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -76. This is not a topping or bottoming area. The last signal was a sell 6 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 1 period(s) ago.

Rex Takasugi – TD Profile

TESLA INC closed down -0.720 at 267.700. Volume was 20% below average (neutral) and Bollinger Bands were 45% narrower than normal.

Open High Low Close Volume___
270.220 271.950 266.830 267.700 6,745,974

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 276.73 288.94 310.91
Volatility: 62 52 74
Volume: 9,823,591 8,811,598 9,255,443

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

TESLA INC is currently 13.9% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of TSLA.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on TSLA.O and have had this outlook for the last 1 periods. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.

You must be logged in to post comments :  
CONNECT WITH