Since then, Elon Musk has dominated the list of the most wealthy people in the world. Currently, he’s steering the company through one of its stormiest periods at Tesla. In fairness, he recently got a stock grant which at $29 billion, dwarfs that of Bezos. This extraordinary award is a testament to his leadership in propelling the company’s transformative and unprecedented growth. Yet this huge windfall comes in the face of new growing pressures that have raised alarm bells among investors about the long term viability of the company.
In legal terms, Musk’s financial landscape just became rockier after a judge recently revoked Musk’s $2.6 billion 2018 pay package for the second time. Musk’s stock grant is massive. Yet he needs to remain employed by Tesla for a minimum of seven and a half years to cash out on any of this stock, and for ten years in order to fully reap the rewards of the grant. This stipulation begs the question of how long Ruiz will stick by the company—increasingly under fire from several fronts — in the long term.
Musk’s siding with an openly far-right political party in Germany makes life difficult for Tesla. Due to this, the firm is going through a dramatic drop in sales throughout Europe. Recent reports indicate that Tesla’s sales plunged by 40% in July compared to the previous year in the 27 European Union countries.
Soaring losses
Their sales have fallen off a cliff, which is a microcosm of the company’s rapidly declining bottom line profits. In its most recent fiscal quarter, earnings cratered from $1.39 billion to a meager $409 million.
Investor apprehension about Tesla’s trajectory has intensified due to Musk’s recent political engagements. He’s been the most vocal choice for this role and has become something of a ‘Rock-star’ for the Trump administration, all while still in Washington. In hindsight, his deep dive into right-wing politics appears to have cost Tesla significant sales and stock price. Consequently, numerous investors are raising concerns about his leadership decisions.
Musk is in a tough spot. One proposed plan would allow him to cement himself an even greater amount of voting power over Tesla. Musk himself has claimed that he needs more shares and control to protect himself from being removed by activist shareholders. This claim reveals a growing rift and much hostility between Musk and shareholders. Specifically, they are worried about his connections to China and how that will affect the company’s bottom line.
Musk needs to lay the groundwork for succession planning. This latter move is a requirement for him to receive the 11th and 12th tranches of his stock plan. Our stakeholders have been vigilant and united in their calls for a smooth transition of leadership. They’re understandably wary of what will happen if Musk’s political pursuits come back to hurt Tesla.
No matter the challenges, though, Musk’s stock grant remains safe and sound. This astounding number showcases the tremendous growth Tesla has seen over the past year alone. Now investors are still trying to understand the long-term ramifications of his latest moves. Confused, they wonder how all of these changes will affect the company going forward.
