Elon Musk's $1trn pay package: "Shareholders see Musk as Tesla's greatest asset"

CGTN Europe

CGTN Europe interviewed Fiona Cincotta, Analyst, City Index

Transcript

00:00And Fiona Sincotta is an analyst at Citi Index. Good to see you. Happy Friday afternoon to you, Fiona.

00:06Welcome back. So it's really a staggering amount of money, isn't it?

00:09400 million additional Tesla shares for Elon Musk, so it's not a salary.

00:13But the targets that he's being expected to hit, they're really eye-watching, like 20 million vehicles,

00:191 million robots, 10 million subscriptions for full self-driving. Can he do it?

00:25That's the trillion-dollar question, I guess.

00:28I mean, you know, what this tells us is that the fact that shareholders approved it

00:33is that they very much see Elon Musk as Tesla's greatest asset.

00:39And I mean, you know, this is very much about the future map forward for this company.

00:44It's not so much about EVs, as you pointed out.

00:48It's much more about, you know, humanoid robotics.

00:50It's about AI. It's about autonomous driving.

00:53And the potential profitability that those sectors could bring to Tesla is potentially huge.

01:01There are very, very vigorous targets.

01:04And I think, you know, the biggest concern here would be Elon Musk not spending enough time with Tesla,

01:12which is, you know, when we've seen that happen in previous occasions, that's when we've seen the share price fall.

01:16Well, to say he's a controversial character is really an understatement, isn't it?

01:21And he's, well, many people say that the brand, the Tesla brand anyway,

01:24has been really tarnished by Trump's, sorry, by Musk's alignment with Donald Trump.

01:30Shareholders seem to want to keep hold of him.

01:31He's seen as an asset for the company.

01:33How are the markets reacting, though, to this decision for his compensation?

01:36Yes. You know, as you point out, we have seen a decline in the share price today.

01:43It's down around 4%.

01:44It is down more than the broader NASDAQ, which is down around 2%.

01:50So we are seeing a sell-off in tech shares more broadly.

01:55And that's sort of to do with overvaluations that's sort of been playing and weighing on market sentiment for a couple of days now.

02:02But I think, you know, there are a little bit of concern because it is a huge number.

02:06And as you said, you know, we have seen that Musk can be a little bit of a liability depending on where he aligns himself

02:13and how much attention he's paying to what.

02:16So I think as long as he focuses on what they want him to focus on, which is Tesla,

02:21and not other sidetrackions, distractions such as U.S. politics, then this could potentially go very well.

02:28Now, members of Tesla's board of directors did help lobby for this new pay package for Elon Musk,

02:33and that did upset some corporate governance experts.

02:36What lessons does this send to other companies about executive compensation and engagement with shareholders?

02:45You know, I think that's a really good question because, I mean, it does feel like this is a very particular case.

02:50And there are a couple of cases which are quite similar.

02:53I mean, obviously, you've got sort of, you know, these high-flying entrepreneurs attracted,

02:58such as Mark Zuckerberg with Meta, Jeff Bezos with Amazon before that, sort of, before he stepped down.

03:04So I think these are very unique company situations, though.

03:09So it's quite difficult to draw very broad conclusions from this.

03:13Fiona, really great to get your input.

03:15Thanks so much.

03:15Fiona Sincotto from City Index.

Category

Transcript

Be the first to comment

Recommended