Tesla, the renowned electric-vehicle giant, has recently undergone a change in its executive team with the departure of Zachary Kirkhorn, who served as the company’s CFO for over four years. As investors take note of this transition, they wonder how Kirkhorn’s stock sales will impact Tesla shares in the market.
Unlike many other corporations, Tesla’s compensation structure for its executives differs significantly. Kirkhorn’s annual base salary amounted to $300,000, a stark contrast to the $1 million base salary of General Motors’ CFO, Paul Jacobson, and the $1.03 million base salary of Ford Motor’s CFO, John Lawler.
However, it is important to note that Kirkhorn is still well compensated, primarily through the form of stock options. He holds approximately 2.7 million Tesla shares, as confirmed by a recent proxy filing. These shares include both existing stocks and those associated with his stock options.
As is customary, investors closely monitor stock sales made by company executives. Among these executives, CEO Elon Musk’s transactions gain particular attention. Musk himself owns more than 715 million Tesla shares, accounting for roughly 20% of the company’s outstanding shares. In 2022 alone, he sold approximately $23 billion worth of Tesla stock, primarily to acquire Twitter, which has since been rebranded as X.
Overall, with Kirkhorn’s departure and the potential stock sales that may follow, Tesla investors are keeping a keen eye on fluctuations in the company’s share prices.
Musk’s Stock Sales Raise Questions for Investors
The recent sales of Tesla stock by Elon Musk have caused significant volatility in the market, leaving investors unsure of when these sales will come to an end. While any stock sales from the company’s former CFO, Zachary Kirkhorn, may impact the stock temporarily, it is important to note that Tesla stock typically trades at high volumes of over 100 million shares per day. Given this context, Kirkhorn’s holdings do not represent a substantial portion of the daily trading volume. Therefore, any impact resulting from his stock sales would primarily be psychological in nature.
Interestingly, Tesla is not the only new energy company experiencing a leadership change in its financial department. Michelle Philpot, the principal accounting officer of SunRun (RUN), recently resigned on August 3 to pursue a new employment opportunity. She will be succeeded by Danny Abajian.
It is worth noting that Vaibhav Taneja, Tesla’s chief accounting officer, has taken over as CFO following Kirkhorn’s departure. Taneja previously held the position of vice president of SolarCity, which was acquired by Tesla in 2016, from March 2016 to February 2017.
Following the news of Kirkhorn’s departure, Tesla stock experienced a drop of almost 1% on Monday. As of early Tuesday trading, Tesla shares are down 1.9%. In comparison, the S&P 500 and Nasdaq Composite have experienced declines of 0.9% and 1.1%, respectively.
It is unlikely that Kirkhorn’s departure is the sole reason behind Tuesday’s drop in Tesla stock. Concurrently, Li Auto (LI), a Chinese EV maker, has seen its American depositary receipts (ADRs) decrease by approximately 8% following the company’s second-quarter results report. Despite this decline, Li Auto ADRs have still increased by about 70% over the past six months.
As for SunRun, its shares are down 4.4% in early trading. However, the stock remained largely unaffected when the management change was initially announced on Monday afternoon.