Musk: Return to Office or Leave

Elon has laid down the law for Tesla employees. It will be interesting to see how many high-quality hands bolt.

Elon Musk tells Tesla staff: return to office or leave
https://www.reuters.com/technology/musk-memo-tesla-staff-ret…

intercst

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I’d look for departures to time up with any stock option grant periods. Stick it out if the next grant is close, then bail.

Investors might want to keep a close eye on the stock price. Management that is out of touch with employee’s wants and needs is not a good sign.

–Peter

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He was very demeaning telling them to “pretend you work elsewhere”.

Bosses like that are getting harder to find as they lose their companies unable to staff them.

I guess it is tiring work being on Twitter ten times a day.

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Peter,

I’d agree on the stock options for managers. Not everyone is a manager. Many lower level employees working from home will seek other employment for more money and remote work now.

I’d look for departures to time up with any stock option grant periods. Stick it out if the next grant is close, then bail.

Amazon and Google initially announced work from home was ending, but then had to walk it way, way back when employees objected. Google went to three days a week in office and Amazon decided to leave it up to supervisors. I think Tesla is going to learn the same lesson.

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Laughing. This is not going to end well for Musk.

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I’d agree on the stock options for managers.

It’s not only managers that get stock options. Options are pretty much a standard part of compensation for engineers and other non-management professionals, particularly in the tech industry. I’ve had several engineers as tax prep clients, and after a few years working at one place, it’s pretty common for most of their compensation to be in stock options rather than a paycheck.

–Peter

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I’d look for departures to time up with any stock option grant periods. Stick it out if the next grant is close, then bail.


This would be true under more normal circumstances when the stock is flat or appreciating in value consistently. If you get grants for options or restricted shares and the company’s stock suddenly drops from (say) $1056 on 12/31/2021 to $740 on 6/1/2022 and it isn’t clear when the stock might rebound $300, many people may have options that are underwater / worthless, providing ZERO incentive to stick around. It is also very difficult for most CEOs to reprice those options when the company’s shareholders who bought at a peak don’t get that choice and doing so conveys to the investing public that the CEO doesn’t think the stock price will recover any time soon.

Tesla’s fiscal year is 1/1 to 12/31 so one can presume employee option grants are probably issued shortly after the 4th quarter books are closed — maybe mid January each year. If that’s true, Tesla employees have options with (roughly) these prices based on eyeballing a chart on Yahoo Finance:

January 15, 2019 – $65 roughly
January 15, 2020 – $100 roughly
January 15, 2021 – $826
January 15, 2022 – $1049

Assuming a 3-year vesting period (pretty typical), that means two thirds of options currently awaiting vesting are worthless to employees, though the 2020 grant is still worth significant dollars ($740 - $100).

This will likely be the point where Elon learns if he has attracted a core team of “car folks” who are laser focused on designing the next cool thing…

…or if he’s hired a bunch of typical software / developer types who have no particular attachment to the “mission” and only have allegiance to their own career progression and salary (NTTAWWT given how Corporate America has behaved over the last twenty years). Given the generally obscene levels of pay in the software industry, I suspect many of his engineers doing work on control systems, user interface design, etc. will jump ship at the drop of a hat. They can find jobs at Ford and Toyota without leaving their chair. Those working at the rocket mill might have more attachment to a relatively unique business mission and opportunity.

WTH

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Does Tesla grant options or RSUs?

Does Tesla grant options or RSUs?

I don’t know but my guess is RSUs. Every tech company I know of does this now. The last options I had were at AMD and I left there late 2011. They had to reprice options because of how poorly the stock was doing in the few years leading up to then. RSUs, of course, are always worth something as long as the stock has any value whatsoever. Options can be worthless.

Slight detour, someone posted on my LinkedIn feed that now about one-third of Tesla engineers are now “open to new opportunities” on their profiles. No idea how to verify if that is true, but this is something that will push people to look elsewhere. As I said, this likely does not end well for Elon. Or, he’s doing this to force attrition w/o a layoff.

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It is also very difficult for most CEOs to reprice those options when the company’s shareholders who bought at a peak don’t get that choice and doing so conveys to the investing public that the CEO doesn’t think the stock price will recover any time soon.

Ah baloney. Westinghouse repriced mine and all managers twice when the share price tanked. We were told not to talk about it, of course, but also of course, we did.

That said, they were still underwater when I left the company, so there’s that…

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bjurasz writes

Slight detour, someone posted on my LinkedIn feed that now about one-third of Tesla engineers are now “open to new opportunities” on their profiles. No idea how to verify if that is true, but this is something that will push people to look elsewhere. As I said, this likely does not end well for Elon. Or, he’s doing this to force attrition w/o a layoff.

Yep, forced “Return to Work” is the new “We have a job for you in Saudi Arabia”.

intercst

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Goofy writes,

Ah baloney. Westinghouse repriced mine and all managers twice when the share price tanked…

Sure, but the company gets punished by investors when it’s disclosed in the proxy statement or an 8K.

I suppose you could get around the disclosure requirements if you were only repricing options for everyone but the 5 highest paid executives, but what are the chances of that happening?

intercst

Those working at the rocket mill might have more attachment to a relatively unique business mission and opportunity.

They work for a different, non public company. They might have some sort of pseudo stock compensation, but it’s definitely not in Tesla.

–Peter

It’s no fun being a swaggering, tin-plated, dictator, with delusions of god-hood, if you don’t have peons close at hand to beat up as the mood strikes.

Steve

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They can find jobs at Ford and Toyota without leaving their chair.

I don’t think most of them want to work at a Ford or a Toyota. It’s a whole different world at those types of regimented companies compared to a freewheeling “startup” style like Tesla. Not to mention that the Toyota culture will also demand coming in to the office.

January 15, 2019 – $65 roughly
January 15, 2020 – $100 roughly
January 15, 2021 – $826
January 15, 2022 – $1049

Based on this, nobody will leave until at least Jan 15, 2024 when the last 1/3 of the $100 options vest. Of course, it all depends on the stock price between now and then. If it drops to 150 or 250 or 350, many will jump ship. If it goes up to 1000 or 1500, they’ll stay till 2026, etc. This applies to most people … very simply because Ford and Toyota will rarely agree to “make them whole” regarding lost stock options. Oh, and I think Tesla also awards restricted shares that vest over 3 years, so that is straight stock, no strike price, so even more of an incentive to stick around.

But again, most of the people who work at Tesla work there because they thrive in that kind of environment. They won’t fit well at a Ford or a Toyota.

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I suppose you could get around the disclosure requirements if you were only repricing options for everyone but the 5 highest paid executives, but what are the chances of that happening?

Very high chance. They use other trickery instead. Like issuing NEW options to the top execs.