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His $55 billion pay package would pay $100k per year for the 14k employees he just laid off for the next 40 years. I’m surprised the stock is still north of $1

His $55 billion pay package would pay $100k per year for the 14k employees he just laid off for the next 40 years. I’m surprised the stock is still north of $100.

pclmulqdq 2y ago
They have produced about 5 million cars total, so his desired pay package is $10,000 per car.
Workaccount2 2y ago
Public CEO compensation is financed by shareholders, not by the company. His Tesla salary is likely zero. You would need to convince the shareholders to give stock compensation to the employees and convince the employees to be paid in stock instead of dollars.
- pclmulqdq 2y ago
  This is not correct, although there is a distinction between cash compensation and shares/options. While the money doesn't come out of Tesla's bank account, stock-based compensation goes down on the balance sheet as a loss, exactly as if it were cash. Startup people are primed to think that cash accounting is what's actually important for a company in terms of doing things, going bankrupt, etc. It largely is for startups. For large companies, however, it's actually the opposite: cash accounting is a sort of boring task left to the accounting department, whose job is usually to keep a minimum amount of cash lying around, and your balance sheets and income statements are actually what determines your access to business opportunities.
  - Workaccount2 2y ago
    >While the money doesn't come out of Tesla's bank account So whats your point? Because regular employee pay sure as shit does. You said it's incorrect, and then in the next sentence stated how it is correct. Yes, Tesla has shares on it's balance sheet. Yes, giving out those shares is a loss in assets. But doing mark-to-market and calling it cash is a bit of woo-woo because no, shares are not cash and they don't become cash until shareholders hand over that cash. Here is a thought experiment: Tomorrow investors just decide to stop buying Tesla stock, and the price goes to zero. Mass brain control or something. The share price just sits at zero. No buy orders anywhere. The company still sells cars. They still have cash coming in. They still can pay suppliers and pay employees. There is profit and everything. The people paid with shares though are screwed. Their compensation is zero. Why is it zero? Because shareholders aren't giving their cash for shares.
    - pclmulqdq 2y ago
      I think you will find that the company actually is quite screwed if the share price is actually at $0, even with a big pile of cash. Stock-compensated employees (Musk included) will leave, suppliers will pull their lines of credit, and people will stop buying the cars. The coffers of cash will likely be drained buying shares from annoyed shareholders, which incidentally props up the share price. That "totally fake" $0 share price will have very real impacts. Also, the situation you just described isn't a $0 share price, it's an illiquid market. That's very different. Aside from being practically unreachable to any company with a positive enterprise value. This isn't some sort of hypothetical libertarian fantasy land where cash is all-powerful and all other economic assets are just worthless paper that can be thrown around. Your scenario might as well say that every company is worthless because that's not cash either, and the same mass-psychosis might hit Google. Most public companies can live for about 2-3 weeks in the situation you just described, even the ones with massive cash reserves, because of how corporate finance works in the real world.
      - Workaccount2 2y ago
        Right, sure. But shareholders still bear the cost of CEO compensation. Whether Elon gets paid 100 shares or 100,000,000 shares, the company still has the same amount of (actual) money to pay employees. This really is not difficult to grasp.
        pclmulqdq 2y ago
        Shareholders bear the cost either way you pay him. And in the same way.
        Workaccount2 2y ago
        Yes, but cutting the number of shares given to Elon doesn't increase the amount of money available to pay employees. The people doing payroll and the managers allocating departmental budgets aren't looking at the share price to determine the numbers. I can flip the though experiment around to "People completely stop buying all Tesla vehicles and products, but the brain damaged Muskites, swept up in his announcement of a time machine, drove the stock up to $10,000." Now there is a situation where Musk's compensation would be in the trillions, but the company itself would be cutting employees left and right. Employees aren't paid with stock. So stop comparing stock compensation to cash compensation.
sieabahlpark 2y ago
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His $55 billion pay package would pay $100k per year for the 14k employees he just laid off for the next 40 years. I’m surprised the stock is still north of $100.

pclmulqdq 2y ago

They have produced about 5 million cars total, so his desired pay package is $10,000 per car.

Workaccount2 2y ago

Public CEO compensation is financed by shareholders, not by the company. His Tesla salary is likely zero. You would need to convince the shareholders to give stock compensation to the employees and convince the employees to be paid in stock instead of dollars.

pclmulqdq 2y ago
This is not correct, although there is a distinction between cash compensation and shares/options. While the money doesn't come out of Tesla's bank account, stock-based compensation goes down on the balance sheet as a loss, exactly as if it were cash. Startup people are primed to think that cash accounting is what's actually important for a company in terms of doing things, going bankrupt, etc. It largely is for startups. For large companies, however, it's actually the opposite: cash accounting is a sort of boring task left to the accounting department, whose job is usually to keep a minimum amount of cash lying around, and your balance sheets and income statements are actually what determines your access to business opportunities.
- Workaccount2 2y ago
  >While the money doesn't come out of Tesla's bank account So whats your point? Because regular employee pay sure as shit does. You said it's incorrect, and then in the next sentence stated how it is correct. Yes, Tesla has shares on it's balance sheet. Yes, giving out those shares is a loss in assets. But doing mark-to-market and calling it cash is a bit of woo-woo because no, shares are not cash and they don't become cash until shareholders hand over that cash. Here is a thought experiment: Tomorrow investors just decide to stop buying Tesla stock, and the price goes to zero. Mass brain control or something. The share price just sits at zero. No buy orders anywhere. The company still sells cars. They still have cash coming in. They still can pay suppliers and pay employees. There is profit and everything. The people paid with shares though are screwed. Their compensation is zero. Why is it zero? Because shareholders aren't giving their cash for shares.
  - pclmulqdq 2y ago
    I think you will find that the company actually is quite screwed if the share price is actually at $0, even with a big pile of cash. Stock-compensated employees (Musk included) will leave, suppliers will pull their lines of credit, and people will stop buying the cars. The coffers of cash will likely be drained buying shares from annoyed shareholders, which incidentally props up the share price. That "totally fake" $0 share price will have very real impacts. Also, the situation you just described isn't a $0 share price, it's an illiquid market. That's very different. Aside from being practically unreachable to any company with a positive enterprise value. This isn't some sort of hypothetical libertarian fantasy land where cash is all-powerful and all other economic assets are just worthless paper that can be thrown around. Your scenario might as well say that every company is worthless because that's not cash either, and the same mass-psychosis might hit Google. Most public companies can live for about 2-3 weeks in the situation you just described, even the ones with massive cash reserves, because of how corporate finance works in the real world.
    - Workaccount2 2y ago
      Right, sure. But shareholders still bear the cost of CEO compensation. Whether Elon gets paid 100 shares or 100,000,000 shares, the company still has the same amount of (actual) money to pay employees. This really is not difficult to grasp.
      - pclmulqdq 2y ago
        Shareholders bear the cost either way you pay him. And in the same way.
        Workaccount2 2y ago
        Yes, but cutting the number of shares given to Elon doesn't increase the amount of money available to pay employees. The people doing payroll and the managers allocating departmental budgets aren't looking at the share price to determine the numbers. I can flip the though experiment around to "People completely stop buying all Tesla vehicles and products, but the brain damaged Muskites, swept up in his announcement of a time machine, drove the stock up to $10,000." Now there is a situation where Musk's compensation would be in the trillions, but the company itself would be cutting employees left and right. Employees aren't paid with stock. So stop comparing stock compensation to cash compensation.

sieabahlpark 2y ago

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