So do I, but I also think the Harvard Law School probably has a better feel of interpreting what was actually said at the trial than you. This is from Tornetta v. Musk: Post-Trial Opinion post in the Harvard Law Forum on Corporate Guidance. Tornetta v. Musk: Post-Trial Opinion
Here are the most relevant passages:
Tesla retained Jon Burg at Aon Hewitt Radford (“Radford”) to value the 2018 Grant in light of the market-based milestones and to advise on the accounting treatment of the 2018 Grant in light of the performance-based milestones.
Burg used Monte Carlo simulations to estimate the probability of hitting the market capitalization milestones, which is a “generally accepted statistical technique” that “simulate[s] a range of possible future” outcomes over a given timeframe using constantly repeating, random potential scenarios.
Burg determined that the first market capitalization goal—described as $100 billion, or $50 billion of growth—would occur 45.55% of the time, after which the likelihood of achieving subsequent milestones rapidly declined to below 10% from milestone six onward.
The odds were against Musk reaching the first milestone and were increasingly against him achieving each subsequent milestone. The most likely outcome based on statistical analysis was that Musk would be paid nothing.
Personally, as someone who doesn’t own Tesla shares (except for funds that own some), I could care less about how much of their money that shareholders want to give a multi-billionaire. It’s their money to give away.
Apparently, individuals giving money to multi-billionaires is quite popular these days.
Stupid is as stupid does.
I admire Warren Buffet. His salary is $100,000 a year. Talk about reducing the skim.
Warren Buffett is one smart market operator but not an innovator. I doubt that Buffett and Musk could switch jobs. It takes all kinds to make the world go round.
I probably have more money in Berkshire than in Tesla. Buffet’s goal is to reduce investment risks as much as possible. Buffet does his due diligence to invest in the sure things. Musk is the polar opposite. His M.O. is to take enormous risks to try to do stuff that has never been done before in hopes of creating a paradigm-shift. What makes him unique is that he is able to get a lot of these (literal) moon shots to work.
Musk wants 25% stock ownership of Tesla because he wants to develop AI his way. He wants more billions of dollars because he wants to be able to fund his own projects and do them his way. He wants his independence because he thinks he is smarter than everyone else.
I think he probably is. A nut case is some ways. But the guy can build stuff.
Most of what Musk has done since leaving Paypal has been an attempt to make things better for humanity. Electric cars, Battery storage, Reusable space craft, Tunnel boring, solar roofs, Neuralink, Optimus are all attempts to try to solve problems and improve society.
I say give him the $50B compensation and let’s see what he can do with it. Maybe he can save humanity before completely burning himself out.
I’m curious about this. Is there some reason he couldn’t do it if he “only” owned 20% of Tesla? Or 15%? More to the point, are there any guarantees that he will follow through and develop the AI to the benefit of Tesla shareholders?
I ask because he also has an AI startup (xAI) in which he presumably holds a gigantic ownership position, so are there any safeguards to see that AI developed within Tesla doesn’t somehow flow out the door into xAI? And I ask that because we have seen that he sometimes uses the assets from one company to tend to the problems of another, the appropriation of Tesla engineers to work at Twitter as just one example.
To be clear, I’m not questioning his wont to do new and exciting things. I am suspect of ethics however, and this episode of “blackmail or I’ll take these assets and put them somewhere else” only reinforces my feeling.
Musk owns around 15% of Tesla, I think? He has 42% of SpaceX (with almost 80% of the voting shares, according to Google.) He probably owns an even higher share of xAI, doesn’t he? Where are the incentives, again?
What you call “blackmail” others would call “negotiations”. NBA players do it when they reach free agency…“Pay me or I take my skills elsewhere”. So do 5-star college athletes with the transfer portal, though in this case it is “Play me or I take my skills elsewhere”. You sound like you were a high-value employee so it wouldn’t surprise me if you used similar hardball negotiation tactics to get a promotion or raise. Is that kind of stuff unethical?
Musk apparently feels that 25% gives him sufficient control. Whether he is lying or not I can’t say. With the current compensation package (which he still does not have even with the vote), Musk can’t sell his shares until 5 years after receiving them. So even if he is only in it for the cash, he has some incentive to keep Tesla stock prices high until he can cash out.
I doubt it, but then I see all of Musk’s companies to be synergistic, e.g., what xAI develops will be put into Optimus for voice communication and Optimus will be put into Tesla factories to improve production.
But really it happens all the time. It’s called “partnering”, like Tesla using CATL provided machinery to build batteries. It is just a question of whether Musk will take the time to do the paperwork to legitimize his companies doing something similar.
Here’s a theoretical. Musk hires Boring at a multimillion dollar cost to put a tunnel from his Texas plant to a parking lot for the sole purpose of parking completed vehicles until they are shipped. In the calculation of whether this is “synergy” is is important to note that the parking lot and plant are separated by a highway, and there are two interchanges and underpasses which would allow the vehicles to be transported by, um, traditional roads.
The “underground road” is completed at a cost of many millions, Boring company gets a job and millions of dollars, Tesla, the public company has paid for it, and … it saves about a half a mile on each of the vehicle odometers as they don’t have to go around a cloverleaf. And Boring, the private company owned by Musk, makes millions.
Now, this is not a theoretical. It’s how it worked.
Ethics? And now you compare the Superstar (and he is, I admit it) demanding all the profit and much of the ownership of Tesla to a baseball player wanting a raise? Did Michael Jordan ever demand ownership of the Bulls? Seriously dude, put down the bong. Yes he’s important. No, he’s not god, and he’s taking shareholder money to his personal private piggy bank and you hope you will someday find the greater fool to make your profit, not the corporation in which you think you are invested.
This is your constant refrain. The appeal to listen to statistical modeling is wrong. Almost 100% of the time. Because it has nothing to do with reality.
xAI is a design firm. The designers get their payday. He is not going to give them billions of hours of business from internet surfing. That will go to X. His cronies own X with him. He will probably sell portions of X to the car companies including Tesla.
TBC is party to commercial agreements with Tesla. Under these agreements, Tesla incurred expenses of approximately $0.2 million in 2023 and approximately $1 million through February 2024.
The Cybertunnel was recently completed. Doesn’t seem like a huge amount of money is going to the Boring Company.
Also, Tesla cybertruck production at the TX plant is currently about 1000/wk and projected to increase to an annual production of 200,000-250,000. That suggests there will be a lot of cybertruck traffic trying to get to the storage lot. And unless Texas allows unsupervised FSD that is a lot of drivers needed to make that 0.5 mile trip crossing a major highway and then return by some other means.
On the other hand, if Tesla has its own private tunnel the cybertrucks can potentially drive themselves to the lot once they get FSD. Hmm, I bet the tunnel will pay for itself pretty quickly.
The analogy would be what happened at the local university. Lots of student pedestrian traffic so a pedestrian bridge was built over an intersection despite perfectly good traffic signals and crosswalks.
Never said he was a god. He just made this shareholder a significant amount of money that I don’t believe anyone else at Tesla could have while at the same time doing more to mitigate climate change than any businessman I can think of. That’s why I say, pay the guy.
