A bright point for Tesla shareholders: as part of the new $ 27 package from Elon Musk, their fate is now linked to its

Remember that in 2024, in response to a trial of the shareholders of the electric vehicle manufacturer, the courts of Delaware invalidated the famous Giga-Giga concession in January 2018. Musk and the company appealed, and the decision is now on appeal. Tesla’s board of directors intervened to ensure that if the Tesla side loses, the CEO will obtain something similar to the figures he would sacrifice. But this time, they attach a series of wise conditions in the absence of the first time.

Naturally, the agreement only applies if Musk and Tesla lose on appeal. If this happens, under the new iteration, he would receive a subsidy in limited equity of 96 million shares at an exercise price of $ 23.34, equivalent to the figure when he obtained the gigantic trove at the start of 2018. At the current price of Tesla of around $ 309, these shares are worth more than $ 27 billion. Here are the restrictions: the actions are devoted to the second anniversary of the grant, or in early August 2027, but only if Musk serves this whole period as CEO or chief of product development or operations. In addition, he cannot sell any of these actions acquired before five years from the date of the award, or on August 3, 2030.

The directors’ objective is obviously to keep the musk in charge to improve the chances that it will draw a high time on its promises for the next robots and humanoid robots and not yet commercial. But for the holders of Tesla who are starting to lose faith as the commitments go and passers -by, the structure of the plan, to use the photo so often found in the CEO’s plans, “aligns” the fate of musk to their own much more closely than the first program

The 2018 plan rewarded Musk for hitting huge evaluation gains with high rhetoric

The brand’s original has promised muscle scholarships of 1% of the Tesla action, each granted as the evaluation increased by an additional $ 50 billion. The starting point was $ 100 billion – a multiple of its market capitalization at the time. If Musk reached the maximum of $ 650 billion, a number that seemed very improbable at the time, he would raise 12% of Tesla’s shares. The frame looked like the process of opening a safe; Obtaining a new 1% required two “keys”, first striking the evaluation bogey, and secondly, reaching 12 of the 18 objectives combined for income and EBITDA. The objective of Higher Ebitda was 14 billion dollars and the highest sales figure 175 billion dollars.

In just three and a half years – in the middle of 2021 – Musque rang the bell. He first exceeded the market capitalization of $ 650 billion, then marked all the benchmarks of the EBITDA and completed this achievement by reaching an intermediate sales bogy of $ 75 billion good overall to meet the requirement of operational measures. Consequently, Musk obtained the complete windfall.

The big concept defect: Musk continued to make big wishes for new incredibly profitable products that have attracted investors. This helped send the stock to the sky, the caregiver to reach the evaluation part. The requirements of income and baiia were relatively easy to reach. Thus, the combination of inflating the course of the action rhetorically and not having to offer fabulous basic profitability numbers won the day.

To be fair, the Tesla ceiling at almost 1 dollars billion is still three times its level when Musk received its subsidy on average by 1%, and 50% above its last article at 650 billion dollars. The problem: it is impossible to have an idea of what Tesla is really worth in the long term. And if it turns out to be mainly a metal flexion car company, or if CAPEX requirements had to create Musk visionary companies, as well as strong competition, make them slightly profitable, the value of Tesla could fall back to something like where it was held when Musk captured the apparently impossible package then apparently impossible at the beginning of 2018, when Tesla exceeded $ 23.34.

As part of the New Deal, if Tesla’s original tanks, Musk are not paid

The original plan had a major weakness. Musk obtained its 12% of the stock. Thus, even if the shares fell to the original exercise price of $ 23.34, putting Tesla’s market capitalization at $ 75 billion, it still had $ 9 billion in equity (12% of $ 75 billion). And the shareholders would have endured a great dilution and would have obtained a zip for this.

But the new plan guarantees that this cannot happen. Is it absolutely impossible for Tesla to fall so far? No way. Just look at its current fundamental principles. The original plan was only logical if Tesla achieved the operating objectives stipulated to trigger subsidies and continued to increase income and profits quickly from there. In other words, the fundamentals had to develop in the evaluation. Musk was mainly paid for great things to come.

It did not happen. During the first two quarters of this year, Tesla sales took place at an annual rate of $ 84 billion just above the $ 75 billion Bogey that Musk struck a few years ago. During the same six months, its EBITDA was blocked at $ 12 billion on an annual basis, below the number of $ 14 billion which has released the payment.

I recently wrote an article on “Musk Magic Premium”, which calculated the value of Tesla according to its current products, and the additional value awarded for the visionary commitments of Musk – this is the premium. To obtain the basic and reproducible gain number for electric vehicles and today’s batteries, I delete gains or accounting losses on its Bitcoin farms and I underlined the sales of regulatory credits which will probably die now due to the recent traction of Trump penalties for car manufacturers who stop buying.

In the last four quarters, this “hardcore” issue is $ 3.3 billion. Imagine that Musk increases this figure to a decent of 8% per year, so that net profits reach $ 5.4 billion in 2030, the Musk year to sell free shares as part of the new program (if that happens). Suppose also that, as it is a manufacturer of weak growth, Tesla deserves a PE which is well above the average of the automotive industry at 14 years. Then it is worth $ 75 billion for five years.

This result would give the actions near Musk’s exercise price of $ 23.34. His large subsidy would be worthless, while in the old one, he still would have actions worth $ 9 billion. Even if Tesla’s actions fell at around $ 50 and its ceiling amounts to around $ 150 billion, Musk would do much less, around 2.5 billion dollars. Yes, this is a good thing that the Tesla’s Board Forcing Musk to wait a long time to be paid. In five years, we will be able to see what all these promises are worth. If they are escaped by an exhaust pipe, shareholders will suffer a lot of time. But Elon Musk will suffer with them.