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Your comment got downvoted (probably because MAD as the only remaining option is strong hyperbole) but the core thrust is sensible. Knowing that a CEO is not g

by Taek 3y ago

Your comment got downvoted (probably because MAD as the only remaining option is strong hyperbole) but the core thrust is sensible. Knowing that a CEO is not going to leave isn't the only relevant factor in discussing increasing CEO comp. Any decent manager understands this about their employees. You may be 100% confident that they won't quit if you don't give them a bonus and also be 100% confident that giving them a bonus (due to moral, motivation, evangelism, etc) is the best outcome for the company anyway. Musk had other companies that were splitting his focus. Sure, without that 6% he'd still be CEO of Tesla. But would he have put more energy instead into SpaceX? Boring Company? Nerualink? OpenAI? When your CEO has so many places to focus his attention, giving him more equity to remain the preferred child makes a lot of sense as a mutually beneficial agreement. *Especially* when that increased compensation is directly tied to performance. And not a trivial outcome, but a serious outcome that brings hundreds of billions of dollars to shareholders.

aw1621107 3y ago
> When your CEO has so many places to focus his attention, giving him more equity to remain the preferred child makes a lot of sense as a mutually beneficial agreement. Alternatively, you could simply condition the compensation on spending a certain amount of time/attention on Tesla. That seems like a much more straightforwards solution of keeping Musk's attention were actually a concern. Perhaps that would warrant a further bump in compensation, but in exchange you get certainty.
- AlchemistCamp 3y ago
  Basing CEO compensation on time spent instead of performance is a horrible idea, IMO.
  - aw1621107 3y ago
    Basing CEO compensation only on time spent may seem like a bad idea, sure, but there's nothing that prevents you from stipulating both performance and time/attention metrics. You may have to offer more equity, but that's all part and parcel of negotiations.
- s1artibartfast 3y ago
  if you want someone's attention so that they catch you fish, it is better to pay based on fish, not time.
  - aw1621107 3y ago
    The two aren't mutually exclusive, and the question here is return on investment, especially if you know said fisherman has strong interests in other ventures. If you're already paying someone to catch you fish, are you going to get more fish by paying them even more or by paying them more and asking them to devote time/attention to catching fish as well?
    - s1artibartfast 3y ago
      >are you going to get more fish by paying them even more or by paying them more and asking them to devote time/attention to catching fish as well? I think that is a really good question. If someone is paid $1 million per fish, can you expect more paying extra for time OR fish. Why give them anything at all? That's what I thought was really interesting in the parent post. Does the fisherman have leverage? Are their only options to keep the old deal, or stop catching fish out of spite?
      - aw1621107 3y ago
        > If someone is paid $1 million per fish, can you expect more paying extra for time OR fish. Why give them anything at all? It comes down to what the payor wants and what they think would provide the best return on their money. If the fisherman's performanace is good enough, perhaps the existing compensation plan is good enough. If you want more, then it becomes a more interesting question, and I don't think there would be a single right answer. > Does the fisherman have leverage? Are their only options to keep the old deal, or stop catching fish out of spite? Of course the fisherman has leverage. It isn't an all-or-nothing situation, either - they can offer a greater return for a greater price, offer to keep the existing arrangement, threaten to reduce time/attention, threaten to walk away altogether, or some other offer. And the other party would be free to make their own counteroffers to try to get the result they want.
ImPostingOnHN 3y ago
If I had to guess, I would say the comment was downvoted because it is unnecessary adversarial, and ignores the obvious non-oppositional-defiant-disorder option: elmu saying "you're right, I don't need that additional compensation to motivate me, my existing stock ownership will motivate me", and for him then to perform. If there's a risk that he wouldn't do the job because of an inability to focus given other responsibilities, a fiduciary would be obliged to remove him from his position. Money wouldn't gain his "focus", because then he would just get his friends at spacex to give him even more tens of billions of company money to "focus" even more. And we all know he'd just be shitposting on Twitter the whole time no matter what.
- s1artibartfast 3y ago
  >If I had to guess, I would say the comment was downvoted because it is unnecessary adversarial, and ignores the obvious non-oppositional-defiant-disorder option: elmu saying "you're right, I don't need that additional compensation to motivate me, my existing stock ownership will motivate me", and for him then to perform. I think there are obviously many options, but I highlighted that aspect because i think it is the most interesting the most interesting. It isnt contradicted by anything you said. Essentially, the question is how do you negotiate splitting the rewards of an continued ongoing venture, when both parties already benefit from success. You see this often in situations of co-ownership. Sometimes one start-up founder will stop working, knowing the other has incentive to make it work. Sometimes you see it in schools when there are group projects.
  - ImPostingOnHN 3y ago
    > Essentially, the question is how do you negotiate splitting the rewards of an continued ongoing venture, when both parties already benefit from success. Close: it's not "both" parties, it's all shareholders, so way more than 2 people to pay. And the "how" is already decided: shareholder vote. And the rewards are already split amongst the shareholders, of which elmu is a large one. Theoretically, elmu might be able to get even more compensation than that, via shareholder vote. But the court said elmu can't lie to all the shareholders to get them to vote yes (which he was found guilty of having done, thus voiding the previous shareholder vote). For further discussion, I'd like to focus on the substantive points of the judgement. Some may have personal opinions on the matter, and the judge considered all those personal opinions, judged them, and came to the below conclusions: - elmu's stock ownership is enough to motivate him, even without a 50 billion dollar additional stock/option grant; - elmu improperly interfered in Tesla governance to exert undue influence on his own compensation at the expense of shareholders and the company; - elmu defrauded shareholders to personally enrich himself at the expense of them and the company. Are these arguable? Well, they were before the judgement, and were indeed argued about. Now that the case is over and the judgement rendered, they aren't. So, I'd like to hear your thoughts on these points now that they've officially and formally been confirmed true.

by Taek 3y ago

aw1621107 3y ago

> When your CEO has so many places to focus his attention, giving him more equity to remain the preferred child makes a lot of sense as a mutually beneficial agreement. Alternatively, you could simply condition the compensation on spending a certain amount of time/attention on Tesla. That seems like a much more straightforwards solution of keeping Musk's attention were actually a concern. Perhaps that would warrant a further bump in compensation, but in exchange you get certainty.

AlchemistCamp 3y ago
Basing CEO compensation on time spent instead of performance is a horrible idea, IMO.
- aw1621107 3y ago
  Basing CEO compensation only on time spent may seem like a bad idea, sure, but there's nothing that prevents you from stipulating both performance and time/attention metrics. You may have to offer more equity, but that's all part and parcel of negotiations.
s1artibartfast 3y ago
if you want someone's attention so that they catch you fish, it is better to pay based on fish, not time.
- aw1621107 3y ago
  The two aren't mutually exclusive, and the question here is return on investment, especially if you know said fisherman has strong interests in other ventures. If you're already paying someone to catch you fish, are you going to get more fish by paying them even more or by paying them more and asking them to devote time/attention to catching fish as well?
  - s1artibartfast 3y ago
    >are you going to get more fish by paying them even more or by paying them more and asking them to devote time/attention to catching fish as well? I think that is a really good question. If someone is paid $1 million per fish, can you expect more paying extra for time OR fish. Why give them anything at all? That's what I thought was really interesting in the parent post. Does the fisherman have leverage? Are their only options to keep the old deal, or stop catching fish out of spite?
    - aw1621107 3y ago
      > If someone is paid $1 million per fish, can you expect more paying extra for time OR fish. Why give them anything at all? It comes down to what the payor wants and what they think would provide the best return on their money. If the fisherman's performanace is good enough, perhaps the existing compensation plan is good enough. If you want more, then it becomes a more interesting question, and I don't think there would be a single right answer. > Does the fisherman have leverage? Are their only options to keep the old deal, or stop catching fish out of spite? Of course the fisherman has leverage. It isn't an all-or-nothing situation, either - they can offer a greater return for a greater price, offer to keep the existing arrangement, threaten to reduce time/attention, threaten to walk away altogether, or some other offer. And the other party would be free to make their own counteroffers to try to get the result they want.

ImPostingOnHN 3y ago

If I had to guess, I would say the comment was downvoted because it is unnecessary adversarial, and ignores the obvious non-oppositional-defiant-disorder option: elmu saying "you're right, I don't need that additional compensation to motivate me, my existing stock ownership will motivate me", and for him then to perform. If there's a risk that he wouldn't do the job because of an inability to focus given other responsibilities, a fiduciary would be obliged to remove him from his position. Money wouldn't gain his "focus", because then he would just get his friends at spacex to give him even more tens of billions of company money to "focus" even more. And we all know he'd just be shitposting on Twitter the whole time no matter what.

s1artibartfast 3y ago
>If I had to guess, I would say the comment was downvoted because it is unnecessary adversarial, and ignores the obvious non-oppositional-defiant-disorder option: elmu saying "you're right, I don't need that additional compensation to motivate me, my existing stock ownership will motivate me", and for him then to perform. I think there are obviously many options, but I highlighted that aspect because i think it is the most interesting the most interesting. It isnt contradicted by anything you said. Essentially, the question is how do you negotiate splitting the rewards of an continued ongoing venture, when both parties already benefit from success. You see this often in situations of co-ownership. Sometimes one start-up founder will stop working, knowing the other has incentive to make it work. Sometimes you see it in schools when there are group projects.
- ImPostingOnHN 3y ago
  > Essentially, the question is how do you negotiate splitting the rewards of an continued ongoing venture, when both parties already benefit from success. Close: it's not "both" parties, it's all shareholders, so way more than 2 people to pay. And the "how" is already decided: shareholder vote. And the rewards are already split amongst the shareholders, of which elmu is a large one. Theoretically, elmu might be able to get even more compensation than that, via shareholder vote. But the court said elmu can't lie to all the shareholders to get them to vote yes (which he was found guilty of having done, thus voiding the previous shareholder vote). For further discussion, I'd like to focus on the substantive points of the judgement. Some may have personal opinions on the matter, and the judge considered all those personal opinions, judged them, and came to the below conclusions: - elmu's stock ownership is enough to motivate him, even without a 50 billion dollar additional stock/option grant; - elmu improperly interfered in Tesla governance to exert undue influence on his own compensation at the expense of shareholders and the company; - elmu defrauded shareholders to personally enrich himself at the expense of them and the company. Are these arguable? Well, they were before the judgement, and were indeed argued about. Now that the case is over and the judgement rendered, they aren't. So, I'd like to hear your thoughts on these points now that they've officially and formally been confirmed true.