5 ms·

The article doesn't go into much details of the stock award. Musk is proposing not taking a salary for the next 10 years and receiving a 1% stock award each tim

by feniv 9y ago

The article doesn't go into much details of the stock award. Musk is proposing not taking a salary for the next 10 years and receiving a 1% stock award each time he meets some insanely aggressive milestones: https://cdn.teslarati.com/wp-content/uploads/2018/01/Tesla-CEO-Elon-Musk-Performance-Award-e1516720893456.jpg https://cdn.teslarati.com/wp-content/uploads/2018/01/Tesla-C... http://ir.tesla.com/releasedetail.cfm?releaseid=1054948 http://ir.tesla.com/releasedetail.cfm?releaseid=1054948 I'm not a TSLA shareholder, but tying CEO performance to company performance rather than an indifferently high salary seems reasonable to me.

John_KZ 9y ago
Or you just allow the CEO to pump and dump the company, because the 1%/year stock will be absolutely massive while riding the hype and when things go south he can just quit and buy half the bahamas. There are much better ways to tie CEO performance to company performance that don't include amputating company stock every time your CEO is paid.
- wand3r 9y ago
  It is a $50B a year target for 12 years, so ya if he "pumped" up the stock by pretty much doubling the current market cap 2 full times over the next 4 years then he could "dump" it straight away. So the argument is that taking the company from ~50B to $650B would create such shareholder value that it would be worth it. It is actually tied to revenue and profit as well. > Tesla has set a dozen targets, each $50 billion more than the next, starting at $100 billion, then $150 billion, then $200 billion and so on, all the way to a market value of $650 billion. In addition, the company has set a dozen revenue and adjusted profit goals. Mr. Musk would receive 1.68 million shares, or about 1 percent of the company, only after he reaches milestones for both. [1] [1]https://www.nytimes.com/2018/01/23/business/dealbook/tesla-elon-musk-pay.html https://www.nytimes.com/2018/01/23/business/dealbook/tesla-e...
freddie_mercury 9y ago
Musk already owns tons of Tesla story and should be motivated by that. There's absolutely no evidence that additional equity would motivate him more. On the contrary, there is plenty of evidence on the diminishing marginal utility of wealth. Like much CEO pay, Musk's pay package is more about status than about motivating him. Or is someone really going to try to make the case that he's kinda half-assing it right now?
- lend000 9y ago
  > On the contrary, there is plenty of evidence on the diminishing marginal utility of wealth. For the average person, but who are you to decide? He clearly already spends his money productively by largely self-funding ambitious projects, and I suspect that he would be pursuing even more if he had infinite resources.
  - cagenut 9y ago
    I'm a shareholder and I just voted against for basically this reason. I don't think the difference between owning 20 billion in equity and owning 25 billion in equity (or whatever) will mater to musk at all. he's fine. and he's going to try to finish what he started either way.
    - tehlike 9y ago
      HE can fund his future ambitions with the additional equity.
    - wirelessest 9y ago
      But the cost to his ego for not meeting a milestone which receives even more publicity because of the big price tag is a big motivator (or at least one could argue) So even if the utility of the funds isn't consequential, a package like this might be one if the few ways to further incentivize a CEO like Musk.
      - IntronExon 9y ago
        If he’s not incentivized by all of the high ideals he claims, plus $20 billion, then he’s broken.
        Roverlord 9y ago
        Maybe some people are infinitely incentivizable, because they can always figure out a way to do something useful with the money. Bill Gates for instance, although his model seems to be give it all away to good causes he believes can accomplish good. Elon still seems to believe more in his own capabilities to accomplish worthwhile things with it. I expect he too has a little txt file somewhere on his desktop, with various amounts as milestones to unlock the next project. Maybe at $22 billion he can afford to start asteroid mining and in orbit construction or something that would top his current accomplishments.
thisisit 9y ago
Is tying CEO performance to company performance really a good idea? Just 3 days ago we had a story about how shareholding affects the company and CEO: https://news.ycombinator.com/item?id=16502607 https://news.ycombinator.com/item?id=16502607 So, it begs the question - What do shareholders do if something like this happens? Additionally, > But the success has also underscored the company’s dependence on its CEO -- a risk factor that’s routinely spelled out in regulatory filings. > “Although Mr. Musk spends significant time with Tesla and is highly active in our management, he does not devote his full time and attention to Tesla,” the firm’s annual report said, noting that he’s also CEO of Space Exploration Technologies Corp. So, it seems Tesla is dependent on Musk but it routinely highlights how he is not fulling paying attention to Tesla. The question becomes - why should they pay a part time CEO a full time salary? And what happens if Musk doesn't hit the target and they need to hire his replacement? > The award could affect what Tesla has to pay to hire a potential successor, Glass Lewis said It might change how other CEOs might view compensation at Tesla. They might push for even more aggressive remuneration. So, its better not to open a door which cannot be closed later.
- RangerScience 9y ago
  Slopes are only slippery when they change the methods by which you make the decision. Otherwise they're just linear gradients. AFAIK, a big part of Musk's success is not forgetting this: What people build (which is probably everything you've ever interacted with) people can build differently; _especially_ things of contracts and concepts like compensation packages. To put it another way; if the stockholders and board of Tesla decide to do something unusual like this, they could also easily decide to do another unusual thing and not repeat it.
  - thisisit 9y ago
    So, you are saying stockholders and board of Tesla should change the method for Musk. And when it comes time to choosing a successor they should again change the method and take a vow to never change the method again.
    - 9y ago
deleted 9y ago
[deleted]

by feniv 9y ago

John_KZ 9y ago

Or you just allow the CEO to pump and dump the company, because the 1%/year stock will be absolutely massive while riding the hype and when things go south he can just quit and buy half the bahamas. There are much better ways to tie CEO performance to company performance that don't include amputating company stock every time your CEO is paid.

wand3r 9y ago
It is a $50B a year target for 12 years, so ya if he "pumped" up the stock by pretty much doubling the current market cap 2 full times over the next 4 years then he could "dump" it straight away. So the argument is that taking the company from ~50B to $650B would create such shareholder value that it would be worth it. It is actually tied to revenue and profit as well. > Tesla has set a dozen targets, each $50 billion more than the next, starting at $100 billion, then $150 billion, then $200 billion and so on, all the way to a market value of $650 billion. In addition, the company has set a dozen revenue and adjusted profit goals. Mr. Musk would receive 1.68 million shares, or about 1 percent of the company, only after he reaches milestones for both. [1] [1]https://www.nytimes.com/2018/01/23/business/dealbook/tesla-elon-musk-pay.html https://www.nytimes.com/2018/01/23/business/dealbook/tesla-e...

freddie_mercury 9y ago

Musk already owns tons of Tesla story and should be motivated by that. There's absolutely no evidence that additional equity would motivate him more. On the contrary, there is plenty of evidence on the diminishing marginal utility of wealth. Like much CEO pay, Musk's pay package is more about status than about motivating him. Or is someone really going to try to make the case that he's kinda half-assing it right now?

lend000 9y ago
> On the contrary, there is plenty of evidence on the diminishing marginal utility of wealth. For the average person, but who are you to decide? He clearly already spends his money productively by largely self-funding ambitious projects, and I suspect that he would be pursuing even more if he had infinite resources.
- cagenut 9y ago
  I'm a shareholder and I just voted against for basically this reason. I don't think the difference between owning 20 billion in equity and owning 25 billion in equity (or whatever) will mater to musk at all. he's fine. and he's going to try to finish what he started either way.
  - tehlike 9y ago
    HE can fund his future ambitions with the additional equity.
  - wirelessest 9y ago
    But the cost to his ego for not meeting a milestone which receives even more publicity because of the big price tag is a big motivator (or at least one could argue) So even if the utility of the funds isn't consequential, a package like this might be one if the few ways to further incentivize a CEO like Musk.
    - IntronExon 9y ago
      If he’s not incentivized by all of the high ideals he claims, plus $20 billion, then he’s broken.
      - Roverlord 9y ago
        Maybe some people are infinitely incentivizable, because they can always figure out a way to do something useful with the money. Bill Gates for instance, although his model seems to be give it all away to good causes he believes can accomplish good. Elon still seems to believe more in his own capabilities to accomplish worthwhile things with it. I expect he too has a little txt file somewhere on his desktop, with various amounts as milestones to unlock the next project. Maybe at $22 billion he can afford to start asteroid mining and in orbit construction or something that would top his current accomplishments.

thisisit 9y ago

Is tying CEO performance to company performance really a good idea? Just 3 days ago we had a story about how shareholding affects the company and CEO: https://news.ycombinator.com/item?id=16502607 https://news.ycombinator.com/item?id=16502607 So, it begs the question - What do shareholders do if something like this happens? Additionally, > But the success has also underscored the company’s dependence on its CEO -- a risk factor that’s routinely spelled out in regulatory filings. > “Although Mr. Musk spends significant time with Tesla and is highly active in our management, he does not devote his full time and attention to Tesla,” the firm’s annual report said, noting that he’s also CEO of Space Exploration Technologies Corp. So, it seems Tesla is dependent on Musk but it routinely highlights how he is not fulling paying attention to Tesla. The question becomes - why should they pay a part time CEO a full time salary? And what happens if Musk doesn't hit the target and they need to hire his replacement? > The award could affect what Tesla has to pay to hire a potential successor, Glass Lewis said It might change how other CEOs might view compensation at Tesla. They might push for even more aggressive remuneration. So, its better not to open a door which cannot be closed later.

RangerScience 9y ago
Slopes are only slippery when they change the methods by which you make the decision. Otherwise they're just linear gradients. AFAIK, a big part of Musk's success is not forgetting this: What people build (which is probably everything you've ever interacted with) people can build differently; _especially_ things of contracts and concepts like compensation packages. To put it another way; if the stockholders and board of Tesla decide to do something unusual like this, they could also easily decide to do another unusual thing and not repeat it.
- thisisit 9y ago
  So, you are saying stockholders and board of Tesla should change the method for Musk. And when it comes time to choosing a successor they should again change the method and take a vow to never change the method again.
  - 9y ago

deleted 9y ago

[deleted]