Musk earns $700 million in first performance-based payout

Tesla CEO Elon Musk earned a $769 million payout. Yahoo Finance’s On The Move panel discusses.

Video Transcript

JULIE HYMAN: Shares of Tesla today are up about 1.7%. And there is news that Elon musk may be getting a big payout. Rick Newman has some details on that for us. So a little news for the haters out there, I guess.

RICK NEWMAN: Or the lovers, I guess. Elon Musk is going to get a bonus of something like $700 million because Tesla has met targets for market cap and share price and some other financial metrics. $700 million, obviously a ton of money. Now, he's already a billionaire. Most of his wealth is in Tesla stock. And this bonus, it's going to come in-- I think it's coming in 12 different tranches. But it adds up to $700 million dollars and will give him a little bit more stake in Tesla.

This is controversial, obviously. I think there's one shareholder who is suing the company, saying this is excessive. But I'll tell you what, I really don't have a problem with it. This was-- this has not been a secret. Tesla has had these targets out there. So if you're a shareholder, you know that this was in the offing. And we've been able to follow along with the share price and the market cap this year. And everybody kind of knew he was going to-- going to get this. So Elon Musk is a lot richer.

DAN HOWLEY: Rick, I just want to ask, is this kind of reason why he was forcing the Fremont plant open against local ordinances, just to keep the market capitalization so high?

RICK NEWMAN: You mean for personal benefit? No, I don't think so. I think there were business reasons for wanting to get the plant reopened as fast as possible. It was their-- they only have two plants in the world that are making cars. The other is in China. So that was critical to them. I mean, GM has dozens of plants.

And let's keep in mind, Elon musk actually tweeted a few weeks back that he thought Tesla's stock price was too high, not too low but too high. And the stock did fall after he tweeted that. And yet he's still hitting these targets.

I mean, just to tell you-- by the way, my view is that Tesla is overvalued and perhaps seriously overvalued. Its market cap right now is around 152 billion. That is about four times what GM is worth and six times what Ford is worth. Does that make sense? I don't think so. They have a fraction of the sales. But you know, look, investors think Tesla's the future and GM and Ford are the past. I think they're wrong. But that's what the market says for now.