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https://www.straitstimes.com/world/united-states/m...

“Mr Elon Musk, the world’s richest person, spent the end of Tesla’s earnings call pleading with investors to ratify his upcoming US$1 trillion pay package”

It's great to see corporate earnings calls being used for their proper purpose and not for the personal benefit of the CEO.

A $1000,0000,0000,000 CEO pay deal for a company with a market cap under $1400,000,000,000... seems slightly generous, perhaps even a little extravagant.

Musk mentions his concern that he might go insane. Considering this remarkable quote from the earnings call, I understand his concern:

"I just don’t feel comfortable building a robot army here"

Why is this company trading at a record high?

Given the behaviour and demands of the CEO, Tesla’s price should drop so low that it could access rare earths directly from the planet’s volcanic core.

TRS

A $1000,0000,0000,000 CEO pay deal for a company with a market cap under $1400,000,000,000... seems slightly generous, perhaps even a little extravagant.


Slightly generous, and even a little extravagant, is probably a good way to describe it.

But put yourself in the shoes of us poor shareholders who have to make a decision about how to vote. Would we rather have our $1,400,000,000,000 company maybe go to 7x to $10,000,000,000,000 and give 10% of that to the guy who took us there? Considering that it was close to bankruptcy in 2008 when that guy took over as CEO in 2008, and up to $1,600,000,000 at the IPO in 2010, and now up another 875x to $1400,000,000,000 (a lot more zeros) today, and that Musk would have to take it up another 7x to $10,000,000,000,000 to get this extravagant bonus. And the problem being that if that happens under Musk as CEO, he takes $1,000,000,000,000, so there's only $9,000,000,000,000 left to divvy up amongst us other shareholders who don't work there?

Or should we take our chances on having someone else in charge and hope the company goes up to at least $9,000,000,000,000 so we can do just as well?

It's actually not hard to accept a little extravagance if you think of it that way.

Hello DTB,

> should we take our chances on having someone else in charge
> It's actually not hard to accept a little extravagance if you think of it that way

1. Why not pay him ten trillion, in return for making the value of Tesla into a thousand trillion company thanks to Musk Magic?

Is there any upper or lower limit to this kind of thinking, where the numbers become more or less believable to Tesla investors?


2. What happens if the company lucks out because of the hard work of the staff, not because of Musk in any way whatsoever? What if he literally just takes a 10 year siesta and by random chance, wins the bet? What if he actively makes things worse by being there, but an engineer lucks out and delivers 'Musk's promises' despite his negative impact?

Is that outcome really worth paying a trillion to Musk?


3. What happens if some other small company solves the problems of e.g. walking household robots, flying cars, inflatable AI chainsaws or whatever, and Musk simply issues equity (from himself, if needed, based on his now-easy-to-unlock trillion), buys them up, and claims 'mission accomplished'?

Is that outcome really worth paying a trillion to Musk?


4. "should we take our chances on having someone else in charge"

Well, every other company is 'taking that chance' every day without any problems, and it's not really 'taking a chance', as you're already losing the bet.

I mean, consider, Musk has failed to produce quite a lot of what he promised.

There aren't many CEOs in the world where magazines write articles about how many promises and commitments they've broken.

https://www.wired.com/story/theres-a-very-simple-p...

So I would say, yes, maybe Tesla investors should try 'taking a chance'.

After all, a different CEO works for every other company in the world pretty well.


5. Consider: if the success of Tesla is so extremely, specifically dependent on Mr Musk that it's worth giving him 75% of all the current equity just to run the company for a while... and if he's so unmotivated in the job currently that it would take a trillion dollars to persuade him to continue to show up for a few more years....

Then maybe investors should weigh up the risk his plane randomly crashes, or he randomly has a massive heart attack or stroke, or develops mental illness or physical illness rendering him unable to work, or that he might be imprisoned for some crime, or that he simply walks away for personal reasons or boredom, etc. A human is not an invincible, immortal engine.

How much of Tesla's current valuation is being supported by the physical and mental wellbeing of a single human and their current lack of calamity in life?


6. Consider: If Musk is genuinely worth well over $1 trillion in terms of the value he adds as CEO, why do you think other companies aren't rushing to offer him $1.1 trillion to run their company instead? I mean, surely China could come up with $2 trillion, scale up his efforts with national resources, and get even better results? Why aren't they doing that?

At some point, you surely have to consider whether shareholder views about Tesla and Musk resemble religious beliefs more than they resemble genuine speculative investment.


TRS

But put yourself in the shoes of us poor shareholders who have to make a decision about how to vote. Would we rather have our $1,400,000,000,000 company maybe go to 7x to $10,000,000,000,000 and give 10% of that to the guy who took us there? Considering that it was close to bankruptcy in 2008 when that guy took over as CEO in 2008, and up to $1,600,000,000 at the IPO in 2010, and now up another 875x to $1400,000,000,000 (a lot more zeros) today, and that Musk would have to take it up another 7x to $10,000,000,000,000 to get this extravagant bonus. And the problem being that if that happens under Musk as CEO, he takes $1,000,000,000,000, so there's only $9,000,000,000,000 left to divvy up amongst us other shareholders who don't work there?

I'd take that part of the deal. But I wouldn't take the rest of the deal that comes with it. The first two tranches require that the market cap increase to $2.5 trillion and Tesla sells 20 millions vehicles in ten years.

Achieving the first one requires a CAGR of about 6.8%. That's less than the 10 average of the S&P 500. No one holding Tesla stock right now is anticipating a CAGR of only 6.8%. They are betting on a whole lot more than that. Otherwise you might as well just hold the index.

It isn't clear if the second goal requires selling 20 million cars in ten years, or 20 million total. But it doesn't matter too much. Tesla makes about 1.8 million units a year and the EV market is expanding by 10-20% per year. Tesla should be able to hit that target just by maintaining market share. So selling only 20 million should be considered a disappointment. It also means the dreams of fleets of robotaxis didn't materialize along with the opportunity for a large volume of high margin FSD subscriptions. That would be another disappointment for most shareholders.

But Elon delivers these disappointing results, he gets $28 billion. That is orders of magnitude more than any CEO not named Elon Musk has ever been paid. Elon might be the only guy who can get them to $8.5 trillion, but he's not the only guy who can get them to $2.5 trillion. Paying somebody that much for those results is shareholder abuse.

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