Tesla: the problem is Musk’s multitasking, not his stake 

Tesla shares are the key to Elon Musk’s ambitions. The Technoking has spent the past eighteen months selling stock in the electric-car company, in part to aid his purchase of Twitter. Shareholders are worried he may sell more. Yet thanks to a generous pay deal his stake in Tesla remains steady.

In 2018, Musk owned 22 per cent of Tesla. Data from the company shows that he still owns just under 21 per cent of its stock, despite large sales. This is because the figure includes tranches of options that have vested from a generous pay deal agreed five years ago.

It could rise further if Tesla agrees to another option-heavy pay deal. Though such a move would be controversial.

Tesla shares are down 11 per cent since the company missed first-quarter profit expectations last week — the result of price cuts designed to ward off competitors. Investors fret that Musk is distracted by Twitter and may have to sell more shares if the social media company loses money. In April, the board capped his borrowing against Tesla stock at $3.5bn, or 25 per cent, a seeming reaction to this concern. However it noted that no Tesla directors or executives had borrowed more than 1 per cent of the amount pledged as collateral, suggesting Musk may not be using his stock to borrow significant funds.

A new pay deal may contain conditions about his involvement in Twitter. But whether Musk continues to sell his shares or is granted more options, his influence over Tesla is unlikely to change. Gregory Shill, professor of law at University of Iowa College of Law, points out that Tesla requires the approval of two-thirds of shares to agree to significant changes. Musk may be the biggest shareholder but he does not have this. His shares do not carry super voting rights either, meaning that unlike Meta’s Mark Zuckerberg he is unable to force change with a vote. Musk’s sway has always depended more on his personality than his stake.