Tesla shares are some of the most sought after securities in the world today. The meteoric rise of the company since its inception in 2003 has seen Tesla become a household name and the company is now the world’s second-most valuable automotive company, behind only Toyota. But one person whose name stands out in any discussion of Tesla is that of founder and CEO, Elon Musk. When it comes to understanding the question of how much of Tesla Musk holds, one must dig into the details of his ownership.
Musk’s Leadership As Founder
When Musk founded Tesla in 2003, he had a vision for the future of sustainable transport, something greater than he had been able to do with PayPal, his first successful venture. He originally bought 10 percent of the company, but after becoming CEO he increased his stake to 22.3 percent in 2008. Fast forward to today, Musk holds around 37.6 million Tesla shares, which makes him by far the largest individual shareholder in the company. Combined with the other 11 members of Tesla’s Board of Directors, Musk owns an impressive 54 percent of the company’s stock.
Musk’s Role as CEO
Elon Musk’s commitment to Tesla is legendary. He works long hours and his influence over the company is ubiquitous. From day one, he has been a strong voice for the advancement of battery technology, artificial intelligence and self-driving cars. While he is the face most associated with Tesla, his influence extends beyond the public persona. In addition to his overriding control of the company as CEO, Musk also plays an active role in product development and company culture, making decisions that have contributed heavily to Tesla’s success and development.
Benefit from Stock Price Gain and Government Grants
Musk has profited immensely from the appreciation of Tesla’s stock price in recent years. His 37.6 million shares are worth an estimate of $31.3 billion as of November 2020, making him the second-richest person in the world, behind only the CEO of Amazon.com, Jeff Bezos. Musk’s wealth is also bolstered by the stock-based compensation he receives whenever Tesla meets preset goals. In addition, Tesla has also received more than $2 billion in government grants, and Musk has profited from this as well.
Criticism of Elon Musk’s Leadership
As impressive as Musk’s ownership of Tesla may be, it has come under fire from some analysts and investors. Critics of his leadership have accused him of focusing too heavily on the computer-driven features of the vehicles and neglecting the important human-touch aspects like interior design and comfort, leading to a product that is less desirable than it should be. Additionally, Musk’s incendiary rhetoric on social media has been seen as unprofessional and has raised concerns amongst investors who worry about his commitment to making sound business decisions.
Summary
Elon Musk, founder and CEO of Tesla, is the biggest individual shareholder in the company. His ownership of 37.6 million shares puts his personal stake in the company at 54 percent and gives him immense power over the company’s decisions. His success has been a boon to his wealth, as the appreciation of Tesla’s stock has made him the second-richest person in the world. Despite this impressive feat, however, Musk’s leadership has been criticized for his lack of focus on key features of the vehicles and for his unprofessional approach to social media.
Musk’s Global Outlook
Musk’s tenure as the head of Tesla has been relatively short-lived, yet his ambition to use electric vehicles to reduce carbon emissions and move the world towards more sustainable energy sources is laudable. He has single-handedly changed the automotive industry and popularized EV technology in a short amount of time. His priority for the future of Tesla is to expand the company’s electric vehicle production beyond cars and trucks and into industries such as shipping and space exploration. Musk is well aware of the influence of his brand and he has publicly stated that he wishes to increase Tesla’s reach to every corner of the world.
Musk’s Corporate Governance
In addition to his contributions to tesla, Musk has been seen as a leader in corporate governance, a value that is highly acclaimed in the business world. Musk’s governance has been characterized as strict but fair. He has held true to his own expectations and has been willing to make tough decisions when needed, such as when he fired CTO JB Straubel in 2019. This proactive management style is one of the many reasons why Musk is so successful and why many view him as one of the most influential businessmen in history.
To further bolster his ownership of Tesla, Musk has implemented a share buyback strategy. Tesla has been buying back shares from investors, providing incentives to shareholders in the form of cash or stock options. These incentives have been used as a way to further secure Musk’s majority stake in the company. Tesla has also announced an ambitious plan to repurchase up to $5 billion of its shares in the near future, a move which could further stabilise the company’s stock price and increase Musk’s wealth.
Criticisms of Musk’s Strategy
While Musk’s strategy to increase his stake in Tesla has been praised by analysts, some investors are less than impressed. Critics of his plan cite the fact that stock buybacks reduce the number of shares in circulation, a move which can make a stock’s price appear to be more valuable than it really is. Additionally, stock buybacks can lead to large insider gains for Musk and other members of the Board of Directors, a situation which some feel could be detrimental to Tesla’s long-term stability.
Conclusion
Elon Musk’s ownership of Tesla has made him one of the most powerful figures in the world today. His majority ownership of Tesla’s shares provides him with immense control over the company’s decision making and has allowed him to use stock buyback strategies to increase his stake further. While his ambition and success have been praised, his ownership of Tesla has also come under criticism for its potential risks to the long-term stability of the company.
