Having skin in the game, you will hear the phrase and from an investors point of view, senior management of a company should own shares in the company they manage. Ideally, enough to give them incentive for the long-term continuation of the company, but not enough to worry about the stock price every day. It is often why at the AGM, senior management compensation is voted on and it usually tries to give more shares over a 5-year vestment and the price of the shares is somewhat less than the market. In this fashion, senior management owns more shares, the shares are in the money and if the company continues to do well, there will be more shares next year.

In an article by Michelle Chapman of the Associated Press, the question of how much is enough, was put to Tesla shareholders and they voted to give more shares to Mr. Musk. Tesla is awarding 96 million shares to restricted stock valued at $29 billion. The exercise price will be $23.34 a share, which is equal to the exercise price per share of the 2018 pay package that was awarded to the CEO. It was held up by a court filing, because the process of awarding the shares was not transparent. The independent directors were not really independent.

Since 2018, the shares of Tesla has grown, which the present Board argued that Mr. Musk deserves compensation because he has delivered transformative and unprecedented growth that translated into immense value generated for Tesla and all shareholders.

Dan Inves, an analyst from Wedbush (you may have seen him on MSBC wearing colorful jackets) said we believe the grant will now keep Musk as CEO at least until 2030 and remove an overhang on the stock. Musk remains Tesla’s biggest asset, and the comp issue was a constant concern since the lawsuit began.

While Tesla was once the world leader in Electric vehicles, the reason people believe in the stock is the autonomous driving and use of robots that is the potential future of driving.

In the most recent quarter, Tesla profits fell from $1.409 billion to $409 million.

Linking to dividend paying stocks, all companies including voting for senior compensation at the AGMs and as shareholders you need to balance is this the right team to lead the stocks higher, keep profits and pay dividends. If the answer is yes, then it is rare for the compensation not to pass; if no the compensation will likely pass but you need to find alternatives.

There are more questions than answers, till the next time – to raising questions.