The institutional shareholders are highly educated in finance.
Does not mean they are worth anything at all. But egos tell them otherwise.
Musk is worth more than any of them in business. I think MBAs, CFAs, and Ph.D.s need stop demanding a belief in them. Half of them truly are dangerous to your wallet. Failures who pass tests.
Note none of them publicly are stating Musk will pull a rug pull.
Put a pin in that thought for a moment. But first, as I mentioned in another thread, Musk’s payout comes from share dilution. So, all those institution’s stakes become less valuable. Not good for them, and that’s a big reason they don’t like it. Another reason is Musk’s payout is larger than the sum total of all the profits Tesla has made in the history of the company. So the profits are flowing from the owners back to the company which is the opposite reason why people invest.
But back to your thought. If someone makes a lot of money in business, they somehow get a pass from scrutiny. All of the discussions we’ve had about Tesla all return to some form your quote. 1. Stock price went up. 2. Musk is richer than everyone else. 3. Therefore Musk is smarter than everyone else. QED.
But I’m old enough I’ve seen this movie before. When Lay and Skilling were running Enron the stock price was going bananas, they got rich, and therefore they were the “smartest guys in the room.” Fortune magazine named Enron the world’s most innovative company six years in a row, including the year they went bankrupt. Everyone was so dazzled by the stock price no one bothered to examine the business. Except for one reporter (who worked for Fortune coincidently) who sat down with the 10-K and found it to be gibberish. But no one cared because “line go up.” When the smoke cleared, Lay and Skilling weren’t doing anything innovative, they were just lying and stealing.
I want to be 100% clear: I am not saying Musk is stealing or running scam. But I am saying the universal defense his apologists give is line go up. That works until line doesn’t go up. Then all the problems are obvious in hindsight.
There is NOTHING non Tesla shareholders can do about Elon’s comp package.
These Enron comparisons are irrational, lies and deliberately misleading.
How is it that folks on an investing board not understand the concept of stocks ?
True, an excellent example of short term thinking.
Factoid, $56 billion is more than the loan the G7 is offering Ukraine.
Consider the implications…
Tesla is one of the richest properties on earth and you can buy a chunk of its future for pennies.
The Captain
If all the future ends up in someone else’s pocket, then the pennies don’t do you any good, do they?
It’s an interesting factoid, for sure. So he gets more than an entire country trying to stave off a hostile enemy which threatens to take away any semblance of freedom they have, but Musk still charges them for Starlink connectivity (or makes the pentagon pay for it?) Quite the guy, eh?
Goofy, all they care about is he is making them money. They care nothing about the human being he is(n’t).
What is missing here is that Musk has increased the value of the company much more than what would be expected from past profits and that the exorbitant amount of this compensation package is still only a fraction of the value added to the company.
When Buffet evaluates a company he uses the past performance to extrapolate future performance and combines that with current profitability to come up with a fair value.
However, some CEOs are so innovative that the future value is legitimately seen as being far greater than what would be extrapolated from past performance. This gives a market value to the company that is far in excess to that justified by past profits. This in turn conveys a similar excess value to the CEO. High risk, high reward.
This fanguy’s narrative is that while Tesla will continue to grow its BEV sales, a much, much larger share of future revenues is going to come from FSD, robotaxi, and Optimus. Furthermore, the only one who can make it all work is Musk. So you challenge him an entirely performance-based compensation package with milestones set so high that even if he gets paid an exorbitant amount, shareholders gain enough to be more than happy with the result.
IMO there are three questions to be asked about Tesla.
If the answers are mostly positive, you become a fanboy.
If the answers are mostly negative, you ridicule fanboys.
But it doesn’t.
Finally you get it!
Yes.
Yes.
The Captain
Musk has had plenty of scrutiny.
Musk is not the only money man who wants an oversized pay package. But he creates companies. The institutions take 1% of the GDP but rarely create a company or get work done.
Musk is not smarter than any of them. He is better at doing things than any of them. Or they’d do more. In fact Wall Street does very little. CEO at Boeing avoids thinking in many instances. GM’s CEO is not really competent. The list goes on. That is not true of Musk. He does things that are objectionable. But he does them with larger purposes.
He is going to commit a rug pull. It was foolish to give him the shares. But no one else is claiming that because they can not see it for themselves. Shows ineptness on their part, both institutions and small shareholders.
odds are if you buy Tesla today you lose money. FSD frees X to make fortunes. FSD does not free Tesla to make more money. To stave off competition Tesla EVs will go for close to cost or below cost.
We all get that FSD allows for billions of hours of internet surfing. When it is functioning better. Those hours will go to X. Giving Musk the shares means he has more control to make contracts between X and Tesla.
Capitalists will buy the rope to hang themselves.
Musk is being jive. His talent over Wall Street is also his street smarts.
Tesla hasn’t paid Musk a base salary since 2019, according to the company’s regulatory filings. Instead, his compensation has been paid through “performance awards” of stock options that are based on Tesla hitting certain milestones, such as vehicle production or increasing the company’s market value.
The pay deal is structured to deliver several rounds of stock options that will allow Musk to buy about 304 million shares of Tesla stock. Musk is able to receive each round of options after the company hits certain milestones — such as when Tesla reached a market value of $100 billion, and then at every $50 billion mark beyond that. (Currently, Tesla’s market cap is about $580 billion.)
The package also includes a requirement that Musk hold onto the shares for five years after he exercises the options, according to regulatory filings.
The 2018 CEO pay package required Elon to deliver
transformative and unprecedented growth to earn any
compensation. It was a big risk, and many thought that
the plan’s targets for benefits to stockholders were simply
unachievable. But our company and our leaders have
always had big dreams and it is fundamental to the
entrepreneurial spirit of Tesla to take big risks for the
chance at big rewards. This has led to the incredible
innovation and progress — and economic gains — that we
have achieved at Tesla. In 2018, we asked for
unbelievable growth and accomplishments. Elon delivered:
Tesla’s stockholders have benefited from unprecedented
growth under Elon’s leadership and Tesla has met every
single one of the 2018 CEO pay package’s targets. And —
most importantly for the future of Tesla — the 2018 CEO
pay package built in further incentives to benefit Tesla
stockholders by requiring that Elon hold onto any shares
he receives when he exercises his options for five years —
which means he will continue to be driven to innovate and
drive growth at Tesla because the value of his shares will
depend on it!
When? If you do not have a reasonably definitive answer, then you are just blowing smoke.
Over time.
You will call it blowing smoke. So what? You want a reward?
Musk can not be trusted. If you own Tesla watch out.
Musk owns more of X than Tesla. Think that one over.
For bonus points Tesla is not the only one in the market longer term for X’s services. X will sell shares privately to F, GM, Toyota or whichever car company wants to partake. Tesla can not do that.