Yahoo Tesla Poll

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21

It always looks simple in hindsight. But lets go back to those halcyon days at the end of 2018, the year Musk’s compensation package was approved by investors.

Tesla was a $50B company that lost almost a billion dollars in 2018 and was way behind fulfilling Musk’s always aggressive promises. By the end of Q1 2019, Tesla had burned through $2B in cash trying to ramp up the Model 3 with a revenue loss of $700M and lower than expected Model 3 deliveries. Adam Jonas of Morgan Stanley, normally a Tesla bull, was raising the possibility of a Tesla restructuring. The stock declined 40% year-to-year. Tesla was about a month away from a cash crunch and bankruptcy with its future dependent on huge sales of a $40K electric sedan in a market where sales of the lower priced Nissan Leaf and Chevy Volt suggested wasn’t all that enthused about EVs.

Few in 2018-2019 thought Musk had a prayer of getting paid.

There is a difference between salary and stock compensation. It’s called risk. There is no risk with a salary. There is enormous risk with stock compensation where you have to wait years before cashing out. Musk was CEO of a company in 2018 valued at $55B that had never made an annual profit, was in the process of losing almost a billion dollars that year, and burning cash trying to put a $40K electric car into a market dominated by gas cars. The value of the company was in decline. Not a good sign if your compensation depends on the value going up.

Once again with gusto, few in 2018-2019 thought Musk had a prayer of getting paid. He took the risk and pulled it off and those of us who stuck with the guy made money. So pay the guy.

This was situation in 2018-2019 when voters approved of Musk’s compensation plan:

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22

This is odd. Musk takes every dime the corporation has ever made and then individual shareholders have to pay him billions besides? On what planet do pension funds, mutual funds and just ordinary inestors have to pay the CEO’s salary?

When it’s all said and done you’re saying individuals have to pay Musk unless they were lucky enough to buy early and find a greater fool to sell out to. And this is a good business model?

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23

If you will get paid this way, YES.

24

Again, utterly and completely not factual. Tesla’s own board acknowledged this fact - which is why the options were initially expensed with a value of $2.6 Billion (that was the value of the shares if Musk rolled out of bed). The board is also on record indicating that the first tranche was easily achievable.

Personally, I am rather bored and a little weary of constantly relitigating this topic ad nauseam so I will let you get the last reply - I am done commenting on it.

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25

Musk is trying to retain control of Tesla.

If he retains control he sends the value of FSD to X.

Lovely.

26

It’s great for Musk and maybe good for investors if everything proceeds as he has foreseen.

Pete

27

Thanks, I do appreciate that.

Tesla Market Cap at the end of 2018 was about $55B and at the time, Tesla was not profitable and burning cash, and having a lot of problems ramping up the Model 3. The market cap requirement for the first tranche was $100B.

In what way was that easily achievable given conditions in 2018-9?

This was Morgan Stanley’s take on Tesla in May 2019:

FYI, Musk achieved the first tranche in 2020 when Tesla’s market cap went from $75B in 2019 to $669B by the end of 2020. This is a 783% increase.

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28
  1. Majority of Shareholder approved.
  2. Some minority (9 shares ?) shareholders claimed that they did not have all the info
  3. Delaware judge sided with minority shareholders lawsuit
  4. Re-vote with Shareholders
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29

Executives work for capital. But that does not mean $50 billion or whatever the specific figure was. That is deceit.

The further deceit is a rug pull to give X control of the internet time.

30

I am smart, highly maneuverable, but no genius, and even so lotsa people have shrieked at me lotsa times over lotsa years that I am lotsa nuts…

d fb

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31

hmm.

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32

Dude. Their salary was one dollar a year. No stock grants. One dollar. Per year.

Critically though, there was one group at the end of 2017 who was pretty sure Musk would get paid, and get paid more than any CEO in history. That group was the Teslsa board of directors.

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Tesla’s internal projections showed that the performance terms of the grant would be met easily. Importantly, that’s not what the board said to the shareholders. The technical term for saying things that you know aren’t true is called “lying.”

Another person who was pretty sure Musk would get paid was then Tesla CFO Deepak Ahuja. Ahuja testified under oath that the comp package had been designed by starting with Musk’s ask, and then back calculating performance metrics such that all the performance metrics would likely be met during the term.

The stock price, of course was under no one’s control. But as discussed before, the stock performance metrics were very gentle. Simply underperforming the S&P 500 for 10 years would have met all the market cap targets. Not a heavy lift at all.

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33

The money indeed comes from the stock market, but specifically comes from Tesla’s owners, the shareholders.

As we all know, a stock’s price is ultimately based on the expected value of future earnings. There are a bunch of different away to calculate the current value of a stock, but that’s the fundamental principle.

If the value of all of the earnings–and more!–is diverted from the owners to the CEO, how much is the stock worth? You might be able to swing something like this occasionally, but if the shareholders never get to enjoy any earnings, then the value of the stock should be zero.

Extracting more from the owners than the company has ever earned is dysfunctional capitalism. That model cannot work indefinitely. Mathmatically it must fail at some point.

That’s the part that is getting lost in all this. If sales are down, deliveries are down, and orders are down, then it makes sense to reduce the workforce. No quibble there. But the discussion is all about “line go up.” What about the underlying enterprise?

Why are sales, orders, and deliveries down? Isn’t it the CEO’s job to grow the company?

It is often said that Tesla is a tech company, not a car company, hence should be valued like a tech company. Last quarter Tesla’s net margins were 5%. For car companies, that is a terrible number. Unthinkable for a tech company. Microsoft’s net margins are like 45%.

As a final note, below is a link to a tracker that follow’s Elon’s activity on Twitter. Click on it, scroll down and look at all the time stamps. I’ll save you the trouble. Elon spends his days arguing with people on Twitter.

I respect that because I spend all day arguing with people on TMF. Difference is: I’m retired.

https://x.com/elon_alerts

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34

Elon’s comp package is getting approved tomorrow. Majority of the Tesla shareholders will be happy.

Meanwhile FSD 12.4 is being rolled out to employees and Optimus is being deployed in Tesla factories and Tesla has secured another $650million contract to build the largest battery energy storage system.

1 Like
35

The happy dance won’t last.

This is not cut a rug. This is pull a rug.

36

Dude, what Musk wants isn’t more money. He wants enough shares (25%) to have what he feels will be sufficient control over the development of Tesla AI. As he puts it, enough shares " “to be influential, but not so much that I can’t be overturned.”

Note that both Sergy Brin and Larry Page have much greater control of Alphabet than Musk has of Tesla.

As of April 9, 2024, Page owned 44.9% of Alphabet’s Class B shares, which allow 10 votes per share. Together, Page and Brin own 86.8% of all Class B shares and hold 51.7% of all votes — giving them ostensible control over the decisions made during shareholders’ meetings. https://www.thestreet.com/lifestyle/larry-page-net-worth-14885116#:~:text=hefty%20income%20stream.-,What%20is%20Larry%20Page’s%20salary%3F,stayed%20on%20as%20a%20director.

Give Musk that level of control and I have no doubt he would work for free. Musk’s main goal isn’t to get rich. It is to change the world.

Total nonsense. When Musk got the compensation package Tesla had never made an annual profit and was running out of cash. They were much more like a high risk unprofitable startup than your typical S&P 500 corporation. Most startups fail. Most companies who have been around for over 10 years without making a profit fail.

Tesla projected it could make the performance terms if it could mass produce the Model 3, and if it could do so profitably at a time when everyone else was losing a ton of money for each EV sold, and if people were willing to buy a $40K electric car during a time when there were few charging stations and ICE car equivalents were $15K cheaper, and if the Model Y could be developed in time and at about $50K take market share away from much cheaper ICE equivalents, and if Tesla could build a gigafactory in China so as to compete in the world’s biggest market.

Seems like a very heavy lift to me. There is only one person in the world who could have pulled it off. He did it, so pay the dude.

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37

Someone is losing control over the fabrications involved.

Musk the hero of this story is only in it for X.

38

Your argument isn’t with me. Telsa’s CFO testified under oath that those targets were very achievable.

I love ya man, but I really think the CFO has a better feel for Tesla’s finances than you do.

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39

Tesla’s owners are totally stupid to think that Tesla is a great stock to buy and hold so the judge must disqualify them to protect them from their own stupidity,

I get it now!

The Captain

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40

Tesla shareholders have overwhelmingly approved the comp package.

Again.

They are also exiting Delaware.

Elon haters have to find something else now.

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