Abu Dhabi, UAEThursday 20 February 2020

Billionaires: Elon Musk gets closer to $346m payout as Tesla value touches $100bn

In our fortnightly round-up, the electric car maker chief could vest his stock options if record performance continues and India plans auction of rare art seized from fugitive Nirav Modi

Elon Musk believes that up to one million people could be living on Mars in the next 50 years. Women need to be given importance in future settlements. AP Photo
Elon Musk believes that up to one million people could be living on Mars in the next 50 years. Women need to be given importance in future settlements. AP Photo

Elon Musk

Tesla’s market value briefly crept above $100 billion (Dh367bn) for the first time, a threshold that will trigger a huge payout for Elon Musk if he can sustain the feat for months.

The electric-car maker’s shares climbed as much as 1.4 per cent in after-hours trading on Tuesday after closing the regular session up 7.2 per cent. At the post-market high of $555.10, Tesla’s market capitalisation was roughly $100.1bn, just short of Volkswagen’s $100.6bn.

Tesla's stock price closed at $564.82 Friday and a market cap of $101.8bn.

Mr Musk, Tesla’s billionaire chief executive, is eligible to receive the first tranche of an all-or-nothing pay award if the company’s market value stays above $100bn for both a one-month and six-month average. On paper, the first chunk of the award would net him about $346 million.

For Mr Musk's subsequent 11 tranches to vest under the terms of the 2018 package, the company's market cap would have to continue to sustainably rise by $50bn increments over the agreement's 10-year period, with the billionaire earning the full package if Tesla's market capitalisation reaches $650bn and the electric car maker achieves several revenue and profit targets.

A full payoff for Musk, who is also the majority owner and chief executive of the SpaceX rocket maker, would surpass anything previously granted to US executives, according to Institutional Shareholder Services, a proxy adviser that recommended investors reject the pay package deal at the time.

Mr Musk, 48, receives no salary or cash bonus, only options that vest based on Tesla's market cap and milestones for growth. He currently has a net worth of around $32bn, according to the Bloomberg Billionaires Index.

Tesla shares have more than doubled since the company reported a surprise third-quarter profit and told investors it was ahead of schedule opening its factory in China and bringing out its next product, the Model Y crossover.

The $100bn milestone comes less than a month after Tesla's stock crossed $420, the infamous price at which Mr Musk had tweeted he would take the electric car maker private.

Mr Musk tweeted he had "funding secured" to take Tesla private in August 2018, when its shares were trading in the mid-$330s, only to later give up under investor pressure and regulatory concerns.

Diamond magnate Nirav Modi at his office in Mumbai in 2016. Photo: Getty Images
Diamond magnate Nirav Modi at his office in Mumbai in 2016. Photo: Getty Images

Nirav Modi

The seized assets of Indian diamond magnate Nirav Modi, arrested in Britain last year over fraud allegations, will be auctioned within the next two months, the Mumbai-based Saffronart auctioneers said on Tuesday.

The auction, sanctioned by a court order, is part of efforts by Prime Minister Narendra Modi's government to sell assets confiscated in criminal cases with the proceeds used to shore up banks struggling with piles of bad debt.

Mr Modi, a billionaire jeweller in his late forties whose diamonds have adorned Hollywood stars such as Kate Winslet and Dakota Johnson, was arrested over allegations of his involvement in a $2bn fraud at India's state-run Punjab National Bank. He has denied the charges and is opposing efforts to extradite him from Britain to India.

Highlighting Saffronart's auction of Mr Modi's assets — seized by India's financial crime-fighting agency — will be "Boy with Lemon" by Hungarian-Indian modernist artist Amrita Sher-Gil valued at 120-180 million rupees (Dh6.1m-Dh9.2m).

Other paintings to be sold include an oil on canvas by India's best known painter M.F. Husain of similar value, and a work worth 70-90 million rupees by modernist V.S. Gaitonde.

Also on the block will be luxury wristwatches from Jaeger LeCoultre and Gerrard Perregaux, several Birkin and Kelly luxury handbags from Hermès and two cars — a Porsche Panamera and a Rolls-Royce Ghost, a Saffronart statement said.

It said it was assessing the value of some assets and would say next week how much it expected to raise from the auction.

Indian tax authorities raised about $8m in an auction conducted last year by Saffronart of rare oil paintings that were seized from Mr Modi.

The pending auction, however, will be the first time India's financial crimes agency has appointed a professional auction house to sell off seized assets, according to Saffronart.

Penny Pritzker, former US commerce secretary under the Obama administration, has endorsed Joe Biden for US President in 2020. Photo: Bloomberg
Penny Pritzker, former US commerce secretary under the Obama administration, has endorsed Joe Biden for US President in 2020. Photo: Bloomberg

Penny Pritzker

Billionaire businesswoman Penny Pritzker, a major Democratic fundraiser and former commerce secretary under President Barack Obama, has endorsed Joe Biden for president.

Ms Pritzker’s support could give the former vice president’s campaign a considerable fundraising boost.

Ms Pritzker, 60, is an heir to the Hyatt Hotel fortune and has a net worth of $2.9bn, according to Forbes. Her father, Donald Pritzker, was one of Hyatt Hotels’ co-founders.

She played an instrumental role in Mr Obama’s rise, helping him raise money for his successful Senate run as well as his 2008 presidential primary campaign against Hillary Clinton. She served as Mr Obama’s commerce secretary from 2013 until he left office.

Her brother J.B. Pritzker is the governor of Illinois.

Penny Pritzker praised Mr Biden’s years of Washington experience in a statement, which noted that she has known him for more than 20 years.

“I can think of no one better prepared for the job of President of the United States than Joe Biden,” she said. “He will be a commander-in-chief that will make all Americans proud, and he will rebuild our alliances to make our nation once again respected across the world as a beacon of hope, opportunity and freedom.”

Mr Biden, who launched his presidential campaign in April, is one of 12 people currently running for the 2020 Democratic nomination.

British money manager Chris Hohn's TCI Fund Management led hedge fund gains in 2019 after making $8.4bn for clients. Photo: Getty Images
British money manager Chris Hohn's TCI Fund Management led hedge fund gains in 2019 after making $8.4bn for clients. Photo: Getty Images

Chris Hohn

British hedge fund manager Chris Hohn is known for his hardball tactics. That approach made Mr Hohn’s TCI Fund Management the world’s best-performing, large hedge fund last year.

Now Mr Hohn, 53, is targeting the fight against global warming. The money manager, with $30bn in assets, is pushing portfolio companies to dramatically reduce greenhouse gas emissions and disclose their carbon footprint. If they don’t, he says he’ll oust their boards or dump their shares.

Just in case anyone doubts his commitment, last fall Mr Hohn and his charity donated £200,000 (Dh959,051) to Extinction Rebellion, the radical climate change movement whose members have blocked traffic in London and glued themselves to jetliners.

For Mr Hohn, who is worth $2bn, his campaign is just a first step in shaking up an asset management industry he says has ignored a planetary crisis.

Still, for all of Mr Hohn’s zeal, his crusade is fraught with the inconsistencies of green investing. TCI once held a big stake in an Indian coal producer; even now, it owns shares in three railroads that burn tons of diesel and ship fossil fuels, including from oil sands, one of the worst sources of greenhouse gases. Another key holding: Ferrovial, the Madrid-based conglomerate that runs airports including London’s Heathrow.

Mr Hohn says it’s far more productive to engage with carbon-heavy companies than to ignore them. On November 30, TCI sent letters to the chief executives of the 17 companies in his portfolio with specific instructions on shortcomings that must be fixed. TCI said it will vote against directors of companies that don’t hit its targets, as well as auditors who fail to report “material climate risks” and it may even sell all its shares in a company.

Mr Hohn is rolling out his green efforts as the asset management industry struggles to find a way to address climate change while delivering the kind of returns investors demand.

Mr Hohn’s TCI led hedge fund gains in 2019 after making $8.4bn for clients, according to LCH Investments’ annual ranking of the 20 hedge funds with the most overall profits since inception.

TCI, which runs a long-biased activist fund and gained 41 per cent in 2019, its best annual performance in six years, returned to the top 20 ranking after a one-year absence.

Updated: January 27, 2020 03:51 PM

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