You hear a lot about CEOs making scandalous bonuses in stock but I was under the impression that they can’t sell massive quantities of stock all at once otherwise the price might drop. I also hear they can get loans using stock as collateral but don’t those loans need to be paid back? Also, apparently hardly anyone pays dividends anymore. Does this money “exist”? Can they purchase stuff worth millions of dollars? Or are they actually cash poor?
In: Economics
Take Tim Cook or Elon Musk. They both have stock grant or option programs based on the performance of their companies. For Musk especially he could get HUGE amounts of stock, but then the targets he must meet are very high, meaning the company became wildly successful.
For the most part they sit on that stock. Musk has no need for $5 billion right now, so no need to sell that much. But they all can set up preprogrammed stock sales to get them a very healthy amount of money on a regular basis without any real impact on the company. Bezos funds his rocket company with a yearly $1 billion sale of Amazon stock.
As far as loans, they do need to be paid back. But the terms are very favorable with value of a solid company’s stock as collateral.
Latest Answers