Musk is paying himself. Why would he be cheap with himself?
The shareholders get results. Should they be cheap with him?
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Then he should be paid for that work (after it is done), and not rob existing shareholders in advance of that work being completed. And by paid, I mean a salary. Giving him 10% or whatever amount of new stock is diluting shareholder value of every other shareholder absent a massive share buyback.
Who is complaining? Or is that just a figure of speech?
The fact is that since Elon’s last compensation package expired he has been working for free at Tesla.
The package of options he was granted in 2012 expired last year after he had received 9 of 10 blocks of potential options. And last month the company disclosed Musk received the last remaining block of options granted under an even more lucrative 2018 pay package.
Elon Musk is currently working for Tesla for free. That could change
https://edition.cnn.com/2023/02/20/investing/elon-musk-pay/index.html
The Captain
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I think he would agree to only getting all that stock if the value goes up by a trillion or so.
It all depends. If you’re diluted by 10% and value goes up by 200%, would the shareholders be upset?
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That was my point, that compensation should come AFTER the work is done. He is demanding the compensation in advance of any work. If the options are structured so that he does not gain additional ownership until the work produces results, then that is different but that does not appear to be what he is demanding.
WSJ weights in:
https://www.wsj.com/business/autos/a-60-plus-billion-pay-package-musk-gives-teslas-board-a-nightmare-task-bb9732e5
A $60-Plus Billion Pay Package? Musk Gives Tesla’s Board a Nightmare Task
Corporate-governance tensions are unavoidable in owner-managed companies, but they needn’t be inflamed on social media
Sorry I am not a subscriber to WSJ. So the above is all I got.
The WSJ article above indicates that the 2024 compensation deal would be similar to the 2018 one - outlandish targets would have to be reached before Musk gets anything meaningful. Here’s a small excerpt -
His 2024 deal, assuming it comes to that, sounds like it might be more of the same, only with even bigger numbers.
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I am not a subscriber so I cannot read the WSJ details. All I can note is that Musk is on record requesting/demanding 25% voting control BEFORE he begins work. I don’t see how that possible with stock options that will not be awarded until some point in the future.
The Tesla AI company could be done as a subsidiary with Musk owning some of the shares or options. And there could be voting and non-voting shares. But if he owns part of the subsidiary there could be conflict of interests issues.
Something for the lawyers to chew on.
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Excellent suggestion. 
In principle I don’t like insiders having shares with 10 the votes while the rabble only gets one vote per share. Then pragmatism took over since if I don’t like a business I just dump the shares.
Elsewhere there was a discussion on classes of shares. They mentioned that in Delaware [I think] you can have several classes of shares when you first register the company but you cannot add privileged classes of shares later on. Tesla AI could be registered with two classes of shares so that obstacle would be overcome.
The Captain
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And of course we know Google has voting and non-voting shares. Identical except for voting rights. And issued to split shares while retaining insider control. Insiders could sell split shares when they needed cash while retaining control.
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Everyone votes: ONE vote and TEN votes.
Usually preferred shares are non voting
The Captain
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I am wondering whether a meaningful stock buy back program would benefit all parties.
The stock price is low which is when a stock buy should occur. TSLA stock is less than half of its lofty Nov 2021 price.
It would increase the ownership stake of current shareholders while driving up share price.
Perhaps Musk could lower his demands as the value of his holdings would increase.
Buy backs can increase shareholder value in the short term, but if the stock is overvalued it destroys value.
I’m not savvy enough to evaluate the stock, but with the announced lower production rates…I dunno.
It would have to be massive to get Musk what he’s asking for. Right now, he owns about 13% of the company - if he exercised all his options, that would come up to about 17%. To get that share up to ~25%, TSLA would have to buy back about a third of the company - roughly $190 billion at current prices. It’s hard to see how that would be feasible.
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Without evaluating the stock I think I can say Musk has stepped in it. Again. Given that the board are all his buddies, but the Street is starting to look askance at that.
If he takes the “AI” out of Tesla, then it’s “a car company” and surely doesn’t deserve the same multiple as Microsoft and Google are sporting. It has great growth, so it should be higher than GM or Ford, but it’s still gonna be a capital intensive mid to low-leverage business and those command a far lower multiple.
If the board says “No, $50 billion is enough incentive” then he’s kind of stuck. If he goes, his Tesla shares are worth less anyway. Of note: 85% of revenue comes from “cars”, and just 6% from “energy/storage” so the ultra-high price (now skidding lower daily) is dependent on the dream of “future”, and it’s not nearly so rosy if he picks up his marbles and gets distracted by yet another company.
Of course he wouldn’t be in this situation if he hadn’t mortgaged so much of his Tesla grants to buy Twitter, which experiment continues to go, um, not well, but that’s water under the bridge - or maybe over the rainbow. Hard to tell with the Tesla crowd. However the big boys in the stock are started to get restless, as seen the past week, and especially given the dreary report earlier this week.
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No.
The Captain
987654321 lift off!
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I don’t think this is about greed. This is about control. Musk sets audacious goals and takes enormous risks, then works like mad to get the job done. If Musk could have been overridden by a board, I suspect Tesla would be a niche company like Rivian, there would be no SpaceX or Neuralink, and the prospects for mitigating climate change much more grim.
This borderline autistic prodigy with the tact of a rabid wolverine has demonstrated that he is one of those once in a generation visionaries who can actually accomplish stuff, virtually all of which improves the human condition from mitigating climate change to helping quadriplegics function.
I say give him the stock, ignore his rants, appreciate the enormous human benefits of his products, and get out of his way.
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I’ve been thinking about this…can he actually take AI out of Tesla, in the sense that Tesla can’t build their own without him? It seems like all the work they have done thus far belongs to Tesla. I assume that Tesla could continue the AI work, just without Musk if they want.
It could be that Musk is so associated with the Tesla brand that his leaving could damage the value of the company. On the other hand, it seems like the board could find someone who could do the same job for less than $25 billion.
Legally? Sure. But they might well be looking at an OpenAI situation. The board certainly had the power to fire Sam Altman while continuing to run an AI program, but all of the people that were working there indicated they would just leave with Altman and move wherever he went. Tesla would own the IP, and (hopefully) they’ve got some non-competes in place…but maybe not? I wouldn’t think that too many AI boffins that have been hired recently would agree to a non-compete that blocked them from the AI field if they left.
So if the TSLA board told Musk to pound sand, many (most? all?!?) of the AI team might just jump ship with him to xAI. Or wherever. And since Musk seems to think that he could cancel the AI/robotics programs at Tesla and do them somewhere else and still remain CEO of Tesla, there’s some real question about whether the Board is independent enough to ever tell Musk to pound sand. Certainly that’s not consistent with having a lot of strong, formal governance controls there right now.
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