The other musk is enriched by Tesla: Elon’s younger brother


The rapid rise in Tesla’s share price has made CEO Elon Musk the richest person in the world this year, but he’s not the only member of the Musk family to profit from it.

Elon’s younger brother, Kimbal Musk, was an early investor in the electric car maker and has served on the company’s board since 2004. It’s a lucrative job. Forbes Cautiously estimates that Kimbal Musk has a net worth of around $ 700 million. This is largely thanks to his 0.04% stake in Tesla, as well as options to purchase 172,250 Tesla shares, valued at around $ 170 million as of November 9. He also owns around $ 2 million in Chipotle stock, where he is also a director, and likely has a stake in SpaceX, Elon Musk’s private spaceflight company, where Kimbal also sits on the board.

The youngest son of Maye and Errol Musk, Kimbal grew up in South Africa and attended Queen’s University in Ontario, Canada with Elon. (Elon left after two years to complete his degree at the University of Pennsylvania.) After graduating in 1995, Kimbal and Elon co-founded Zip2, a software company that was acquired by Compaq in 1999. After that, he invested in, Elon’s next startup company, which eventually became part of Paypal, according to CNBC. He joined Tesla’s board the same year Elon invested $ 6.5 million to become the company’s largest shareholder and chairman of the board.

Kimbal invested in Tesla with his own cash and was also granted valuable stock options over the years in compensation for his tenure on the board. In 2008, at the height of the recession, Kimbal’s personal investments collapsed, so he sold his remaining assets and placed them in Tesla to help the ailing company stay afloat, according to Bloomberg 2015 Biography of Journalist Ashlee Vance “Elon Musk: Tesla, SpaceX and the Quest for a Fantastic Future”. “I was close to bankruptcy,” Kimbal told Vance.

We don’t know how much Kimbal invested; a spokesperson would only say that he was a “first investor”. According to documents filed with the Securities and Exchange Commission, Kimbal participated in a 2008 bridge financing round in which investors loaned Tesla money in exchange for a convertible note to buy shares in a reduced rate. Kimbal ended up with 594,857 shares. It is not known if he has invested more of his own money in the business over the years.

What is clear: Kimbal’s stake in Tesla has been very lucrative for him. Since the electric carmaker’s IPO in 2010, it has sold nearly $ 230 million (pre-tax) of Tesla shares. This includes a massive stock sell-off last Friday, just before Tesla’s share price fell 12% after Elon’s Twitter poll on whether he should sell 10% of his stake in Tesla drove stocks down. Forbes estimates Kimbal was worth $ 752 million before the stock fell.

In addition, Kimbal uses a proven tactic of the ultra-rich to get even more money: take out loans against his stocks. According to documents filed with the SEC, in July Kimbal pledged 599,740 Tesla shares – every share he owned – as collateral for personal loans. Forbes updated its stake in Tesla to reflect the pledged shares.

The seat of the Kimbal board of directors was not without complaints of nepotism. In 2018, a group of activist pension fund managers and shareholders attempted and ultimately failed to oust Kimbal from the board. They argued that Kimbal’s family ties prevent him from serving as an independent director. The group also pointed out that Kimbal “has no professional experience in the automotive industry” and “has proven ineffective as a manager of a public company in Chipotle”. Another proposal in October, by proxy advisory firm Institutional Shareholder Services, attempted to kick Kimbal and chief executive James Murdoch from the board over what ISS saw as their “excessive pay” in options. purchase of shares.

“There is no explanation as to why the scale of option grants is so much more important than the compensation of directors of comparable companies,” reads a report on the subject from ISS. ISS declined to elaborate on their proposal.

In a statement, Kimbal did not directly address his net worth, but instead sent Forbes a long missive on its investment philosophy and philanthropy.

“We are inspired by the next generation of young farmers, entrepreneurs and innovators who are helping fight climate change by growing more nutritious local foods, reducing food waste and creating regenerative as well as plant-based meat. and cells, ”Kimbal said in the statement.

Outside of Tesla, Kimbal is a restaurateur and an investor in the food space. Around the same time he joined Tesla’s board of directors, Kimbal co-founded The Kitchen Restaurant Group, which operates three farm-to-table restaurant chains across the country. He co-founded urban agriculture startup Square Roots in 2016 and has invested in the Everytable meal subscription service and lab-grown meat company Upside Foods, among other startups. Kimbal also started Big Green, a non-profit organization that creates gardens in schools and aims to teach students about nutrition, health and food literacy.

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