I wonder why cash flow is not mentioned. Cash has a quality of its own.
Tesla has been pivoting to robots/taxis/FSD. Cars by now are mostly commodities (transportation). In the old days they used to be status and sexual symbols. Today just look at darling BYD’s problems.
I’m voting for.
The Captain
One odd thing to me is that some of the milestones involve unit sales that I presume do not have minimum prices (haven’t seen any mention of that). Selling a million robots (or whatever the number is) seems actually easy, doesn’t it? Heck, not saying he would do this, but if I were writing a screenplay, I would have a fictional CEO get some crony billionaires to buy them in exchange for whatever store of value.
There are some EBITDA measures, which is good, but as someone else said, what about cash flow? What about shares outstanding, should they also be in the mix?
And as far as market cap milestones, again, if I were writing a screenplay, I would have the fictional CEO try to use the meme generation to do it (as well as other short-term stuff).
Honestly, Tesla is a great asset, but I wish we had another CEO. There’s so much potential to this company, but it needs someone else, someone like a Cook or a Huang.
Or, maybe the car business needs to be sold/spun and concentration should be on robots and AI; these last two elements he might do well with. Maybe combine those with SpaceX, although on the latter, I’m not really sure what the true value is there - that is a bet essentially on government contracts, and that might be too variable over time to do as well as other xX-growth investments. I should point out that, more than FSD, I think the robot thing might be the best journey to high xX returns.
I’ve said this before, but Musk should concentrate on being a Hollywood mogul like David Ellison…truthfully, I think that’s where his heart is; he’s a showman, I don’t think he cares about Mars, or the environment, or curing disease, he just wants to be a part of pop culture. EV at this point might be too boring for him. Use Twitter as a jumping-off point into a multimedia conglomerate, maybe incorporating AI into the mix.
Long TSLA but barely at this point…
If I were Huang I would feel insulted being dragged down to Cook’s level.
I first came across Elon Musk on June 2013 when he showcased Tesla’s ability to swap batteries just like Kandi was doing. I figured he was just a showman. Quite some time passed and I came across him again in September 2020 at the Battery Day Show and became a shareholder. Musk is a multifaceted player.
The Captain
Tesla appears to be quite behind on robots.
(sorry I can’t post the link because TMF is so $##&$ stupid that it blocks the website name because it contains the letters f and the letter u, followed by turism)
While Benioff suggests that an Optimus robot will cost anywhere up to half a million dollars, Chinese robot company Unitree is already selling a bipedal alternative for a mere $16,000 — which can do a lot more than vaguely pointing out where the kitchen is.
Hawkwin
Seriously, TMF?!? any word with the letter f followed by the letter u is blocked? How stupid!
Benioff is full of (TMF censored word).
Before anyone started spouting numbers I priced the cost of an Optimus robot by comparing it to the cost of Tesla making EVs. I came up with a number between 10 and 15 K.
Musk predicted that Optimus could one day cost “less than a car” if produced at scale. “You should be able to buy an Optimus robot for I think probably 20,000 to 30,000 dollars.”
https://robotsguide.com/robots/optimus
The Captain
Didn’t he also predict that you would be able to buy a Cybertruck with 250 miles of range at $39K? His predictions don’t have a great track record when it comes to pricing or timing.
Which is the other really weird/bad thing about this compensation package. A third of the milestones are tied to specific products, and all the early ones have low to average levels of market returns.
I understand (I think) the investment thesis behind Tesla and its relationship to Musk. The idea isn’t that you’re buying the existing business - you’re buying an opportunity to be involved with Musk’s future ventures that are in development. He’s one part industrialist, one part venture capitalist: a guy that can spot the cutting edge economic opportunities on the tech side (like a techie Warren Buffett) and actually lead a company into fulfilling those opportunities. You’re paying for the chance to be with him when he spots the longshot opportunities and lands them.
So why lock him into robotaxis and robots? Why give him “safe” money in the early part of the deal?
A big part of what you’re paying for is his ability to take risks, pivot the company into other things when the old markets are getting played out, and spot the next big opportunities. And to pivot away from things when they’re not working, which a lot of CEO’s don’t have the ability to do. Musk does. Which is why Tesla isn’t spending a lot of capital building solar roofs, battery development, computer chips, or even auto plants anymore. Musk has the ability to say, “yeah, I know we spent more than a billion dollars on Dojo - but it’s not working and other players are just fine, so we’re moving on.” They’ve switched to autonomy and robots. Had his old package been locked into, say, delivering a million solar roofs, making X numbers of computer chips, or getting annual car deliveries up to 2.5 million then 3.5 million then 4.5 million, he would have enormous disincentive to walk away from those things and move on to the Next Big Thing.
Why give up that aspect of Tesla - act as though Tesla is now an autonomy and robot company and won’t ever pivot away from those things during Musk’s leadership? Why aren’t all of these milestones based on generalized measures of financial success (earnings or cash flow or market cap), rather than whether they sell a specific number of FSD subs that might not be the right path for Tesla in a few years?
How about fun? or fungi? or fumigate? or fumble?
Mike
Beats me. I just know I was blocked from futurism.com
Edit: trying to add it again:
Maybe someone fixed it?!?
Someone should fix Futurism’s hit piece.
The Captain
If you had read the proposal, you might have seen:
There is a risk that the technologies and initiatives associated with the 2025 CEO Performance Award, including the Product Goals, are misaligned with current or future consumer demand, resulting in Tesla’s failure to invest in or pursue another opportunity that generates significant financial returns or leads to greater shareholder value.
If the 2025 CEO Performance Award inadvertently directs Tesla’s focus and resources toward specific technologies that are misaligned with market preferences, or such preferences evolve unfavorably, or customer demand for these innovations does not materialize as anticipated, Tesla may miss opportunities better aligned with other needs. In particular, the Product Goals may not be indicative of the types of products or services that would, in the long run, generate financial returns necessary to justify the significant market capitalization goals of the 2025 CEO Performance Award. The Special Committee designed the Product Goals to incentivize Mr. Musk to devote time and energy to development of these products and services, as the Special Committee determined that these products and services are directionally consistent with Musk’s vision for the future of Tesla. Tesla’s investments in these technologies and initiatives, including those underlying the Product Goals, frequently involve long development timelines and substantial capital, and there is no assurance that these investments will deliver the expected business, financial or reputational benefits. As a result, misalignment of consumer demand and the technologies and initiatives associated with the 2025 CEO Performance Award, including the Product Goals, may impair Tesla’s ability to realize returns on such investments and could lead to strategic misalignment, underperformance or write-downs of related assets, all of which could have a negative impact on Tesla’s financial performance and stock price.
There, of course, is no way to predict whether the commercial offerings of such technologies and initiatives will be successful enough or competitive enough with consumers to meet the levels set forth in the Product Goals, or if achievement of the levels set forth in any of the Product Goals will result in meaningful long-term shareholder value or financial returns. While the Special Committee believes this Product Goal represents a long-term opportunity, there is no guarantee that such an opportunity will result in financial return.
That said, the Product Goals only get him at most 4 tranches. The other 8 require EBITDA achievements reaching a level no other company in the history of the world has achieved.
ALL 12 tranches require “market cap” achievements. Yes, I’m quoting you.
Eight of the twelve requires EBITDA achivements as well.
If they come “early,” then they’re greater than “average levels of market returns.” For instance, if the first tranche goal of $2T market cap comes in say, 2 years, that would be a CAGR of 34.8%. Note that one of the Product Goals or EBITDA Goals would also need to be achieved for that tranche to be awarded.
So, if TSLA is $670 in 2 years, then Tesla would also have to have delivered a million bots or have a million robotaxis in operation or have 10 million FSD subscriptions – OR have an EBITDA of $50B (last year’s EBITDA was $11.35B, so that would be a 340% increase in just 2 years.
Note the proposal includes a CAGR chart:
Sure - but why don’t the performance milestones also only reflect generalized financial accomplishments, rather than specific numeric targets for specific products? It’s nice that the shareholder proposal identifies this as a risk that Tesla is choosing to assume - but why are they assuming it in the first place?
“Early,” in the sense that they’re the earliest ones in the chart - the ones hit at the lowest market caps. Not early in the sense of time. The first 140 million shares are tied to the production and/or sale of specific products; the later 280 million shares are tied to more general financial milestones. Which, again, is an usual choice to make - since presumably one of the major reasons one values Musk is that he’s able to shift away from moribund product development to whatever offers the best opportunities today.
No. You really should read the proposal before commenting further. Or at least watch the video I linked above.
I did. I’m aware that he gets to use any of the operational milestones at any tranche. But there’s a reason that these are listed in this order - it’s highly unlikely that he’s going to get to any of the later Operational Milestones if he doesn’t hit these. And unlike earnings, he has 100% control over whether Tesla hits the product milestones.
Please do enlighten us, especially considering that selling 20 million cumulative vehicles is listed first.
Jeez.
I never said otherwise. That’s a product milestone. One of the things that are under Musk’s direct control. Since Tesla’s already selling 1.8 million vehicles per year and only needs to hit 12 million more over the next ten years, it’s probably a “layup” milestone - so I’m not sure why it is worth unlocking more than ten billion dollars in comp. Again, when someone like the CEO of NVDA “only” gets paid about $45 million a year after turning a $100 billion company into a $4 trillion company.
Sigh. Of course you did, as I quoted.
I agree that selling 20m culmulative is easy, but it despite being listed first, it ain’t gonna happen first. And it doesn’t unlock anything on its own without a market cap increase.
Back to being ignored, you are.
Where did I say that? I didn’t exclude the cars sold from the Operational Milestones. I went back through thread and checked again.
