Skip to content

Musk, Tesla and the Telegraph’s lack of subs

However, if he succeeds he could get one of the biggest windfalls ever received by a chief executive – almost $70bn, though this assumes the company does not issue more shares or raise equity.

At today’s prices, the award is worth about $7.2bn, on top of the almost 20pc stake in the business must already holds.

The award really, really, isn’t worth $7.2 billion at today’s prices.

No, really, it isn’t.

For each of the total of 12 milestones achieved, Mr Musk will see stock options vest equal to 1pc of Tesla’s outstanding shares – about 1.7m shares at the moment. At the current share price of $351, each milestone is worth almost $600m.

If Mr Musk hits all the targets, he is in line for more than $7bn, calculated against Tesla’s current share price.




20pc stake in the business must already holds.

which the company is trudging to build in sufficient quantities.

I rather like that second typo but still. Much more important is the misunderstanding of the plan itself.

Stock awards are taxed. An award of $7 billion would attract tax of $1.4 billion (capital gains) or $2.8 billion (income, both -ish figures). The tax is payable at the time of the award of the value, whatever it is. If Tesla has just awarded Musk $7 billion then one of those two tax bills is due.

For example, an option award (which they say this is) needs to be at current share prices. If there’s a discount to current market then that’s an income which has been paid to the recipient (this is what did in Steve Jobs, recall, backdating options prices?), an income upon which tax is due. Now (OK, this tax year).

Tesla really haven’t just stuck Musk with a billions $ tax bill. Therefore the deal isn’t worth $7 billion today.

If only the people writing the newspapers knew things, eh?

18 thoughts on “Musk, Tesla and the Telegraph’s lack of subs”

  1. It happens all the time Tim, I wouldn’t worry about it.

    I have never heard anyone describe taxation issues when footballers/celebrities earnings get a mention.

  2. Apart from the lead writers, some of whom still cut it, the quality of general reporting and articles means the Telegraph is a shadow of its former reasonably authoritative if opinionated self. It may even be worse than the Guardian in that respect. Maybe the sports section is still OK?

  3. The only real question of interest is whether anyone thinks Musk will hit any of the milestones, much less all of them.

    The milestones Musk has achieved to date are as follows: (1) Conning journalists into thinking he’s a genius, (2) Building an expensive, unreliable electric car that can’t be sold on the open market without large government subsidies, and (3) Completely fucking up Tesla’s attempts at mass automobile manufacturing.

    Presuming Musk will earn his bonus is rather presumptuous.

  4. Pingback: Samizdata quote of the day « Samizdata

  5. Reporting gross income when it would be more accurate to report net income is a minor error. You are right, net after taxes is what the award is “worth” to Musk. It is a bigger error to blur his equity (20% of the company) with potential income.

    Bigger still to regard the conditional award as a “windfall,” and to go Full Obama on us and imply that Musk has more money than he really needs. The metrics describe a Tesla that does not yet exist. If he brings it into being, he will have created wealth and it harms no one if he gets a big slice of it.

    “Resist we much,” to quote Al Sharpton, who obviously meant to say Resist we Musk.

  6. To go slightly off topic, if I were a billionaire, I’d be prepared to spend a tidy sum to have a go at Amber Heard

  7. if tesla handed elon some EXCHANGE TRADED options, then elon would immediatly owe tax on the option premium …
    …. but tesla is granting ( vesting him in) “employee stock options”. if they are struck “at the money” at the time of granting, then no tax is due untill he exercises the option (tax due on “in the money” amount)

  8. So you’re saying ALL women are electric cars?

    The best I’ve seen is “so you are saying I’m going to spend the rest of my life as an internet meme?” under a photo of said journalist.

  9. Bloke in North Dorset

    “Cathy Newman, Ace Reporter, welcome! Make us a cuppa, love, now you’re here.”

    You want tea? Why do you hate coffee growers so much and want them all to die?

  10. @Cathy Newman, Ace Reporter, January 24, 2018 at 12:43 pm

    “So you’re saying ALL women are electric cars?”

    That’s not what I said. Not all, but many are by choice: if they go on a long journey they stop working multiple times before reaching destination.

Leave a Reply

Your email address will not be published. Required fields are marked *