I don't know what that boardroom are smoking..

They voted to give him 10% of the supposed value of the company, while sacking over 10% of its staff...

Are they going to short their own stock now and let Tesla crash and burn faster than a borked SpaceX rocket?

Clearly you are letting your hatred of the person influence your view of the award.

The award was always going to be high - it depended on Tesla stock reaching very optimistic targets (and other things), which meant that other shareholders have made more than a 10x return... it's not that much of a cost to get a tenfold return.

Clearly you are letting your cult of the person influence your view of the award.

Nope - I think it was always a bloody ridiculous award, noone is "worth" that kind of money.

Elon is not a saint, neither is he the devil incarnate.

But the snide jibe at spacex's incredibly successful starship testing campaign is not something that has any bearing on this particular award.

I imagine he could be made one - the old fashioned way. Hell, usually rather grisly and gruesome, and uniformly fatal but worth having a day of the year set aside for the faithful to remember you.

A quick look through a list of patron saints I perceive that position of patron saint for charlatins, con men and shysters is currently vacant. (Thieves appear to already have one.)

By his own admission he is often stoned so baby steps... ;)

Not sure he'd even qualify for that role...

I think it's funny how drug addicts are universally derided unless they're in charge of billion dollar companies and then we all look the other way.

I'm not letting my hatred of the man influence my judgement, but NOBODY deserves a bonus the size of the GDP of a small country. The underlying commercial performance of Tesla hasn't improved like the share price has.

And since Sep 2021, Tesla share price has dropped by 51%. If all the rise for the 2018 inventive package was down to Elmo, then all of the decline is down to his spoilt man-baby antics. Will he be proportionately rewarded for that drop?

Legally, I don't think that was ever the issue. The case was whether the board should have been able to make such a commitment, in a sense a future liability, of the company in the first place. And the court in Delaware, a place traditionally chosen by companies for its investor friendly approach, decided it wasn't.

The court case went into the details as to why it thought the award was unreasonable. I'm not that familiar with the details, but I'm sure it's possible to consider the award a future charge on the company, in which case it should have been in the accounts.

This were definitely not shareholders who agreed to pay the confidence man. This looks more like you'll scratch my back, I'll scratch your back deal (and what else to expect from boards where members are usually entitled pricks with with all the formal and informal connections to support this sort of dealings). Or is this an exit scam for our space hero? Hopefully with this, he'll be able to afford one way ticket to Mars or other distant place.

"This were definitely not shareholders who agreed to pay the confidence man"

Not seen any numbers to confirm, but press coverage suggests that it was in fact Joe Schmuck who swung the vote, after Musk appealed to retail investors. If I was an institutional investor I'd now be thinking that it's the time to get out. Musk's sense of entitlement and infallibility has just been rewarded and reinforced, so the various challenges that tesla face seem likely to become more significant. I'm struggling to see any big upside that supports an increase in a share that's been unsupported by commercial fundamentals for a long while, just seen 10% dilution, and has entrenched and erratic leadership.

If I was an institutional investor I'd have been out already.

The new US tariffs make it a reasonable hedge and many of them may still be sitting a pretty gain. But this proposed dilution will affect the gearing and we may see some shares change hands because there are obviously more than a few who still believe™.

I don't know numbers, but the whole reason it got blocked by the courts was legal action by shareholders, and indeed this vote may not be binding due to that decision (Hence the attempts to move the corporate headquarters as well).

OTOH people buying stock in Tesla are likely to look at Musk as being essential to it's success, he seems generally to be a bit of a marmite personality.

The legal action was from >some< shareholders, not all, and they were in the minority unless they obtained their shares after the award was approved, and they're in the minority now (if they still own those shares).

What I'd like to see is the terms of the bonus honoured: That if the company failed to hit the targets set, he gets nothing... which should have been the grounds for the lawsuit: Tesla didn't hit the agreed value (from what I could see from the various stories), so Musk gets the amount agreed for the value it did hit (aka $0). But if it did hit target, he gets what was agreed. I might not agree to how much was agreed, but I'd have to go buy shares in Tesla to object.

Hmm... do I risk what money I have on tesla shares just to object to Musky getting that payout? hmmm...

The original deal came from the board who are supposed to represent the investors but really represent Elon. In return for Elon's huge award Elon had to deliver a on some easy targets and the board would get a huge pay day. That payday [1]got cancelled but the board had already done their side of the bargain: misleading investors about the (lack of) difficulty of the [2]targets .

Current investors did not have good options. The long term strategy would be to deny Musk's payday, hope he goes quietly, kick his family and friends off the board and install some competent management. Fat chance of any of that working.

The short term strategy would be to pay up, accept the share dilution and let Musk do what he does best: hype the share value way beyond the real value of Tesla. It is a short term strategy. There will be a limited window of opportunity to sell out. Musk will close that window and the Texas courts will not protect investors' interests with anything like the diligence of the Delaware Court of Chancery.

[1] https://www.reuters.com/legal/tesla-directors-settle-lawsuit-over-compensation-735-mln-2023-07-17/

[2] https://www.reuters.com/legal/judge-rules-favor-plaintiffs-challenging-musks-tesla-pay-package-2024-01-30/

Thanks very much for the summary!

Looking back in time at 2017, Tesla had huge problems ramping up the model 3. At that time it was hardly imagineable that those set goals could be reached. Pro memoria:

https://www.vanityfair.com/news/2018/01/what-elon-musks-pay-deal-says-about-the-tech-industry

https://www.cnbc.com/2018/03/21/tesla-shareholders-approve-elon-musks-multibilion-dollar-compensation-plan.html

https://www.nytimes.com/2018/01/23/business/dealbook/tesla-elon-musk-pay.html

https://hbr.org/2018/05/elon-musks-unusual-compensation-plan-isnt-really-about-compensation-at-all

The Model 3 problems were entirely of their own (and especially) Elmo's making. Solving a f***up he oversaw doesn't deserve a reward so large that in dollar bills it would reach to the moon and back.

Never seen dollar bills stacked end to end as a comparison (would take $5 billion) or side to side ($10 billion). Usually used as a stack, which would take $7.6 trillion.

You'll have to bear with me, I'm going through a "how much would that look like in physical money?" phase as will be apparent in other recent posts of mine.

50 billion * .069 (cubic inches) = 56 535 370.8 litres or in [1]elReg units that's just shy of 22.6 olympic sized swimming pools

[1] https://www.theregister.com/Design/page/reg-standards-converter.html

ANd that assumes he did the solving as opposed of getting in the way of those doing the actual solving.

everything looks like a foot.

shoot, it had to be said

Is there such a thing?

That sum of money should be working for the company in terms of investment - when were the Tesla models last refreshed?

Musk does not need that money, not even for paying off Twitter, as the majority of that was on borrowed money

I would guess the institutional investors will divest by trickling their holdings onto the market to retrieve as much value as the stock starts to head (further) south.

I assume they would also take out "insurance" in derivatives but not sure how far they would legally be able to go.

I would not imagine shorting a stock before you dumped 10% of the total shares on the market would be legal... but hell this is America. ;)

In a few words, many institutional investors can't divest Tesla because TSLA is part of the S&P 500 index and if you're going to have ETFs that track S&P 500, then you're going to need to keep TSLA around.

Sorry.

48,000 workers given USD$1,000,000?

or 480,000 workers given USD$100,000

this would have been a much better wealth share?

But no, workers were axed to help giving USD$48,000,000,000 to ONE F***wit

This really makes no sense.

Basically what you are suggesting is that we should reward people who don't try, didn't try at school and just turn up and do the minimum. They should get the same as someone who puts in years of effort, with blood, sweat and tears?

Are you a Communist?

Isn't there some kind of happy medium between "everyone gets the same no matter what they do" and what we have now, where the super rich get almost all the rewards? Either extreme doesn't seem fair.

Spot the unevidenced assumption.

Oh yeah mate, Elon got where is because he just works several million times harder than everyone else. It's amazing, really. His caloric intake must be that of several entire nationstates.

I'm sure coming from money didn't have anything to do with it, capitalism is of course a perfect meritocracy where everyone gets their just desserts, and those lazy useless fools who actually build the cars deserve no extra recompense for actually making the product that Elon and investors profit from.

If they wanted to be billionaires, they should have worked harder back when they were 4-24 years old in their state schools and community colleges, which is exactly how all billionaires got where they are today.

/s

Sorta.

First off, the $56 billion is paper money. That's why it's worth only $48 billion now.

Secondly, it's value is derived solely from the price of a share of TSLA.

Thirdly, in order for Musk to convert that paper money to real money, he's going to have to find literally billions of dollars from other investors who want to buy his shares at the time he divests. Given the enormous quantity of shares he has, any considerable selling off his shares will cause the price to drop in a very noticeable way. (It happened when he sold a ton of TSLA to get cash to buy Twitter, for example.)

Finally, a company's share price - or the sum of the total or fraction thereof of shares - has no direct effect on the company's books, except when that company chooses to issue more shares or buys back shares. The value of a company from the lens of it's stock price is the value that investors give it. No more and no less. It (seemingly and more rarely in a general sense) has little bearing of the company's actual value creation.

Your last statement can only be true for employees (former or otherwise) who own shares of TSLA AND voted to give Musk that massive traunch of stock.

In theory, the company issuing more shares and selling them has no effect on the value of the other shares. Although there are more shares the company value has increased by the revenue from the sale. Likewise in theory a company buying back shares has no effect on the share value: the company has become less valuable because it paid out money but that lower value is divided between a smaller number of shares. Of course this does not apply if the company issues shares and gives them away to the man actively antagonizing most of the company's potential customers.

Selling shares will not be Musk's first choice. Selling shares at a profit would make the profit taxable. Also selling shares reduces his control of the company and ability to fuck over the other investors. The move to Texas clearly shows intent to get beyond the range of the Delaware Court of Chancery and avoid consequences for future actions. The better choice would be to use the shares as collateral for loans. Musk made this more difficult for himself when he burned the bankers that let him buy Twitter on credit. There are always more bankers - until you get to Alfa. Best to stop before you reach that point unless you can become president.

Stupid, stupid bastards.

Why do people here assume he just gets money sent into his bank accounts because of that compensation agreement?

Musk was given 10 years of performance targets to hit, targets that when reached would result in a payout of stock options. Musk could earn 303 million options—the number has been adjusted for stock splits—equivalent to about 12% of Tesla stock outstanding in 2018.

Those options would be delivered in 12 separate tranches, with the board awarding Musk 1% of the stock outstanding for each set of goals completed. To reach those tranches, Musk had 28 targets he needed to hit. Of those, 12 were tied to market capitalization measured in $50 billion increments up to $650 million, eight were tied to earnings, and eight to revenue.

As a result, according to the 2023 proxy statement, Musk has earned all but 25 million of the options available to him.

The entire package is worth $56 billion at current prices. Each option has a strike price of about $23 a share—adjusted for stock splits—and Tesla stock is worth about $650 billion at just over $200 a share. Hitting $650 billion means the value of Musk’s options is worth about $180 each. That’s the difference between the stock price, at $650 billion, and the option strike price. The $180 per option figure multiplied by the 303 million options equals roughly $56 billion.

So in order to get all of the options, Musk still needs to shelf out roughly $6.4 billion that will go into Tesla accounts and he's prohibited to sell those shares for another 5 years.

That's a nice summary. I doubt anybody here thinks that he's actually getting it in used banknotes, but it is a nice way to think about it.

The value of Tesla is very closely tied to the promises and promotions of Musk - so retail investors in particular are utterly reliant on the man himself sticking with the company, or their shares will (likely) drop to levels that more closely reflect the actual value of Tesla's current business. Their current business is not nearly as healthy as the shares suggest, and likely to get worse before it gets better (if it does at all). He's basically got them hostage.

If you believe the thesis that the current AI revolution is going to lead to AGI (or as Musk puts it "super sentient robots" - whatever that means), then you could argue that Tesla is worth it's current value only thanks to Musk's vision. After all, the guys who actually founded the company only wanted to make affordable electric cars. However, the evidence is that in Telsa, Musk has completely lost his competitive advantage in the EV industry, going from claiming that he knew more about manufacturing than any other person on the planet to telling us that China will dominate the EV industry in only a couple of years.

In AI, he's not even got a working product yet and already the companies he claimed to be obliterating have not only caught up, but are overtaking his (only slightly faked, honest) demonstrations - see Mercedes, Baidu and others for interesting autonomous vehicle tech, Boston Dynamics for robots and Open AI, Meta and Microsoft for general artificial intelligence. Remarkably, Telsa is being out-spent, out engineered and out-paced by those companies only because Musk drew so much attention to the area.

So what's an investor to do? Follow the greater fool theory and hold onto stocks and Musk so long as the dream is not lost and quietly start selling up before the wheels really fall off, or eject him, tank the stock and see all those lovely profits vanish? Not much of a choice really.

It is amusing however that his stock compensation is actually significantly larger than all profits ever made by the company. You have to wonder at the competence of the board of directors that set up a compensation scheme that pretty much guarantees the company is in for some very difficult times....

My definition would be an AI that goes on strike until it gets human rights.