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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 employee

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 3y 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 3y ago
  Shareholders bear the cost either way you pay him. And in the same way.
  - Workaccount2 3y 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.
    - pclmulqdq 3y ago
      I would recommend taking a basic accounting course before commenting on how public company accounting works. It's actually a lot more complicated than "company has cash, shareholders have stock", and by trying to reduce things to simplistic scenarios where the stock and the cash are completely unlinked from each other, you are not describing real life in any way. The practical reality for public companies is that cash and stock are pretty much fungible. You can issue shares and give them to Musk, or you can issue shares, sell them on the open market, and get cash to pay your employees. If you have excess cash, you can buy back shares from the open market. Companies actually frequently do this - most of them have a department called the "treasury" which, among other things, day trades their own stock (within limits set by public announcements) in order to get cash at a good price - but you never hear about it. $1 of stock and $1 of cash are roughly equivalent in actual value. In both cases, the shareholders are dilluted by $1 extra.
      - Workaccount2 3y ago
        My man will say anything to avoid acknowledging that share compensation is not deducted from revenue. Anything to avoid acknowledging that shareholders pre-approved the transfer of those shares to execs. Company revenue is in trouble? Just do an offering! Stocks = cash! Surely ownership is fine with bankrolling dead weight.
        pclmulqdq 3y ago
        That literally is how it works, though. Companies that are in trouble literally do stock offerings. Companies that are not in trouble also do small offerings to keep their cash on hand low while paying the bills. Also, I'm not arguing about the approval of the compensation package.
        Workaccount2 3y ago
        You know what companies do way more frequently when they are in trouble? Layoffs. But when you are CEO you can inform the board of this magic money source called offering, where you can keep bloated headcounts and not lose profits. I'm sure they will listen to you.

Workaccount2 3y 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 3y ago
Shareholders bear the cost either way you pay him. And in the same way.
- Workaccount2 3y 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.
  - pclmulqdq 3y ago
    I would recommend taking a basic accounting course before commenting on how public company accounting works. It's actually a lot more complicated than "company has cash, shareholders have stock", and by trying to reduce things to simplistic scenarios where the stock and the cash are completely unlinked from each other, you are not describing real life in any way. The practical reality for public companies is that cash and stock are pretty much fungible. You can issue shares and give them to Musk, or you can issue shares, sell them on the open market, and get cash to pay your employees. If you have excess cash, you can buy back shares from the open market. Companies actually frequently do this - most of them have a department called the "treasury" which, among other things, day trades their own stock (within limits set by public announcements) in order to get cash at a good price - but you never hear about it. $1 of stock and $1 of cash are roughly equivalent in actual value. In both cases, the shareholders are dilluted by $1 extra.
    - Workaccount2 3y ago
      My man will say anything to avoid acknowledging that share compensation is not deducted from revenue. Anything to avoid acknowledging that shareholders pre-approved the transfer of those shares to execs. Company revenue is in trouble? Just do an offering! Stocks = cash! Surely ownership is fine with bankrolling dead weight.
      - pclmulqdq 3y ago
        That literally is how it works, though. Companies that are in trouble literally do stock offerings. Companies that are not in trouble also do small offerings to keep their cash on hand low while paying the bills. Also, I'm not arguing about the approval of the compensation package.
        Workaccount2 3y ago
        You know what companies do way more frequently when they are in trouble? Layoffs. But when you are CEO you can inform the board of this magic money source called offering, where you can keep bloated headcounts and not lose profits. I'm sure they will listen to you.