Ed Coppe

So here is a Reuters article from three finance journalists regarding Elon Musk's proposed pay package. Reuters is seemingly a reputable media source. And surely the three journalists would know what they are talking about. Surely. Sadly this is a hit piece, cleverly disguised as a piece of investigative, financial journalism. Let me quote from the article: Yet Musk could reap tens of billions of dollars without meeting most of those targets, according to a Reuters analysis of his performance goals and more than a dozen experts in executive pay, company valuations, robotics and automotive trends including autonomous driving. He could collect more than $50 billion by hitting a handful of the board’s easier goals that won’t necessarily revolutionize Tesla’s products or business, the Reuters review found. Even hitting just two of the easiest targets, along with modest stock growth, would net Musk $26 billion, more than the lifetime pay of the next eight best-paid CEOs combined, a group that includes Meta Platforms' Mark Zuckerberg, Oracle co-founder Larry Ellison, Apple's Tim Cook, and Nvidia's Jensen Huang, according to an analysis for Reuters by research firm Equilar. The article goes on to say: Musk’s vehicle sales goals are exceptionally easy to achieve, according to four automotive experts. If Musk sells 1.2 million cars a year over the next decade, on average, he earns $8.2 billion in stock if Tesla’s market value grows from $1.4 trillion today to $2 trillion in 2035, well under long-term market-average growth. That’s a half-million fewer cars per year than Tesla sold in 2024. Three other product-development goals are written in vague language that could provide Musk hefty payouts without significantly boosting profit, according to six robotics or autonomous-driving industry experts who reviewed Musk’s goals for Reuters. MODEST TARGETS WORTH BILLIONS Hitting any two product goals in a decade, along with a $2.5 trillion valuation, pays Musk $26.4 billion in stock. Hitting three targets and a $3 trillion valuation pays him $54.6 billion. That means Musk could earn these amounts without delivering driverless Teslas, the signature product he’s promised for a decade. Well that seems pretty cut and dried. A soft pay package that potentially delivers Elon Musk tens of billions of dollars without achieving much. As a Tesla shareholder I should be outraged. Unfortunately for these three dim witted finance journalists, us Tesla shareholders are not quite so stupid. Here are some inconvenient facts: The market expects Tesla to have Earnings per share (EPS) of somewhere in the vicinity of $1.70 per share in 2025 (and not much growth into 2026), this represents a P/E of 260 times. Comparable motor vehicle manufacturers are on P/Es of between 5-15 times. Comparable MAG7 technology companies are on P/Es of between 25-40 times. So if Tesla really only produces a few million cars each year for the next decade, what do you think its profits will be in 2026, 2027 or 2028. Well I can tell you that EPS is unlikely to be above $5 in any of those years. And if that is the case, what P/E should Tesla be at if profits don’t dramatically improve? Well if one is an optimist, maybe you could convince yourself that a P/E of 40 would be acceptable, certainly not a P/E of 260 times. So, if Tesla’s EPS is $5 in 2028 and you apply a P/E of 40, you get a share price of $200 – a market cap of $630 million. Elon Musk earns nothing for three years of toil. What if the Reuters other thesis plays out – Tesla achieves (through clever manipulation) its FSD target of 10 million Active FSD Subscriptions by dramatically dropping the price of FSD. So now Tesla achieves some vehicle sales growth but dramatically reduces its earnings from FSD, what do you think its profits will be in 2026, 2027 or 2028. Well I can tell you that EPS is still unlikely to be above $5 in any of those years. So again, Tesla won’t be earning anything above $5 in 2028, won’t deserve a P/E above 40 and its market cap won’t exceed $630 million. Still nothing for Elon Musk for three years of toil. The only realistic way Elon Musk can reach just the first of the twelve hurdles (increase the market cap of Tesla from $1.38 billion to $2 billion), is by dramatically increasing it profits (EPS) and showing a path towards further dramatic profit growth. Tesla’s profits in the next few years cannot be dramatically increased without the successful rollout of Robotaxis or a dramatic increase in the profitable adoption of FSD or making a solid start in the production of Optimus. So, I say to Chris Kirkham, Rachael Levy and Abhirup Roy, you should know that when you put pen to paper and you demonstrate either your willingness to distort reality to spread misinformation or your lack of financial awareness, you are undermining your credibility. Now maybe you don’t care or you believe there won’t be enough people that really understand the numbers to matter, but you should at least have good look in the mirror tomorrow morning and ask yourself, “am I proud of the depths into which I have allowed myself to fall?” @TeslaLarry @CernBasher @farzyness @stevenmarkryan @herbertong @TeslaBoomerMama @elonmusk @c_kirkham @rachael_levy @abhiruproy30 Musk's Tesla package pays him billions even if he misses 'Mars-shot' goals reuters.com/legal/transactio…