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Elon is brilliant, but the compensation plan is nuts

Elon is brilliant, but the compensation plan is nuts

Corporate boards have gone insane, and Tesla's board aims to top them all. The people deciding executive compensation are so far out of touch with the average American that they treat executive pay as Monopoly money. Yet, workers salaries are treated as if they were giving a kidney. News articles explain the total compensation for Elon to be as high as $55 billion. No one, absolutely no one, is worth that much. It is great that Elon's vision can get the whole company pulling together for a common goal, but it is an insult to the tiers of underlings that actually make it happen.

The board is in its own bubble of alternate reality which allows them to send out shareholder letters that ask for approval votes, but NEVER actually say what is being approved. The letter uses flowery statements like, "Elon's compensation will be 100% aligned with the interests of our stockholders." However, it does not include any specifics of the compensation. The letter even says, "You will find more details about the proposed award in the following pages," but the entire thing is about Tesla's market capitalization and not one number actually about compensation.

How convenient it is for the board to omit the actual compensation plan, omit any projections about dollar value, and omit any cost per share of existing stock. Elon has such following that this will probably be approved, but not with my votes.

carlk | 03. maaliskuu 2018

Are you a shareholder? I am. The way it is structured the more Elon makes the happier I am. Pretty much every financial analyst thinks the same too. Compensation plans people having problem with is those that executives still got paid handsomely even when company is losing values.

carlk | 03. maaliskuu 2018

BTW details of the compensation plan are all clearly spelled out in the proxy.

Uncle Paul | 03. maaliskuu 2018

I believe the compensation plan is brilliant.

#1. It keeps Elon engaged with Tesla for at least 10 more years, at no cost. If Elon were to leave the company to focus on selling flame throwers, Tesla would tank.

#2. Elon works for free unless he accomplishes all the tremendous goals required to get his bonus payment. Tremendous savings every year compared to the amount of salary he could negotiate. ($50 Mil. a year?)

#3. Even if he gets his bonus, it will be paid out in stock, no cost to the profitability of the company. Only cost would be to other stockholders, who would be the happiest investors in the world if the stock value would rise with Tesla's success.

#4, And most important of all. The amount of money paid to additional hired employees would be tremendously more than that paid to Elon. Of course he would have the biggest single paycheck, but the money paid to all those employees would dwarf his compensation.

People wanting income equality are unrealistic. I do not know of any place in the world where everybody makes the same. Even in Communist China or Russia the leaders live a life of lavish excess, far greater than government leaders in the USA (Joe Biden rides a train to work). In revolutionary Cuba, all the workers toil for abject poverty, owning no property or even the house they live in (all owned by the State) while the revolutionary leaders and their families live in comparitive luxury.

Maxxer | 04. maaliskuu 2018

This buy almost went bankrupt 5 times,
worked tirelessly for 10 years
cut his lifespan by 5 years with his sleepless nights
got divorced and lost a lot because he got invested so much in his companies
he's changing the world by competing oil magnates

He should get 5 times the compensation the CEO of Exxon mobil gets. Period.

Nobody has risked more than Elon Musk on this frigging planet.

Maxxer | 04. maaliskuu 2018

This *guy almost went bankrupt 5 times,
worked tirelessly for 10 years
cut his lifespan by 5 years with his sleepless nights
got divorced and lost a lot because he got invested so much in his companies
he's changing the world by competing oil magnates risking assassination
He should get 5 times the compensation the CEO of Exxon mobil gets. Period.
Nobody has risked more than Elon Musk on this frigging planet.

SO | 04. maaliskuu 2018

I voted yes.

Frank99 | 04. maaliskuu 2018

As a holder of a piddly number of Tesla shares, I voted yes. American business would be remarkably more competitive if every CEO had their compensation as closely tied to long-term success as this new plan does.

Tropopause | 04. maaliskuu 2018

I voted Yes/For as well.

SamO | 05. maaliskuu 2018

Voted yes.

DonS | 05. maaliskuu 2018

I guess if the number is big enough, people cannot comprehend how obscenely large it really is.
Per Bloomberg, the top 5 CEOs in total compensation for 2016 were:
1. Mark Lore of Walmart at $237 million
2. Tim Cook of Apple at $150 million
3. Sundar Pichai of Google at $107 million
4. Elon Musk of Tesla at $100 million
5. Gini Rometty of IBM at $97 million

I expect Elon to work 50 times harder in the future to justify the scale of the new incentive plan.

(BTW, the full incentive plan can be found on-lne at proxy-vote, where I did read it. The shareholder letter via US mail, which I also carefully read, refers to "more details about the proposed award in the following pages," details that are not included in the mailing.)

carlk | 05. maaliskuu 2018

Voted yes. I kind of think people who are against do not own shares.

carlk | 05. maaliskuu 2018

For those who do not own shares this may make you feel better. Elon does not need the money for himself. He has stated many times the only reason he needs money is he could use it to do good things.

Mike83 | 05. maaliskuu 2018

All our votes are YES.
Here is something that is interesting. If your a billionaire and just put$1 billion in T and get 5% interest the yearly income is $50 million. Try spending $140,000 per day everyday.

NKYTA | 06. maaliskuu 2018

A new P100D every day? I'm in!

Mike83 | 06. maaliskuu 2018

I'd order 100 Tesla Semi's and a dozen new Roadsters using all the colors available and 2 Superchargers.

Tesla-David | 06. maaliskuu 2018

My TSLA shares and my wife shares voted YES. EM deserves this compensation for everything he has done to shape this company and make it what it is. Very proud of Tesla and EM and am very confident in its future.

rxlawdude | 06. maaliskuu 2018

Well, the lawsuits are already being threatened against the Musk compensation plan.

And the shorties are FUDDING like all get out.

SamO | 06. maaliskuu 2018

What's your short exposure on a ~12X increase over the next 10 years?

Mike83 | 06. maaliskuu 2018

I would like to see more shorts get fooled so the squeeze produces maximum pain, after all they are gambling on the downfall of an American business providing thousands of new jobs and the OEM jobs associated.

Tcornwell | 06. maaliskuu 2018

I am not a shareholder. I am an owner though of MS.
He is worth every penny of compensation detailed in the plan and consider it cheap. If he takes this company to these heights it won't matter how much he gets. Tesla will be unstoppable, that scares me more. There will be no competition like there is no competition now really.

"God Speed Elon Musk".

We all must remember this is not some little fun trip to transforming the future, it takes work, dedication and lets be real honest here, he seems to give it his all with little sleep. SO much so, he cannot seem to have a decent relationship with anyone. In fact, its sort of sad.
Lets look at the flip side. Tomorrow he disappears for whatever reason. Everyone will be wishing he was still at the helm at any price.

Offline | 06. maaliskuu 2018

I'm a shareholder and I'm voting yes. I'll also be shocked (and yet incredibly happy) if he actually delivers on the results required in this plan. More than anything, this is a way to keep Elon invested in working on Tesla.

Tropopause | 06. maaliskuu 2018

Name any CEO that works harder than Elon. He’s worth it!

georgehawley.fl.us | 06. maaliskuu 2018

Don't worry. We are living in a simulation.😉

DTsea | 07. maaliskuu 2018

he doesnt get paid for working hard. he gets paid for being a unique person who has and will achieve unique things. and if he doesnt achieve extreme results he gets NOTHING.

dons i suggest you focus on STEPPING UP in YOUR LIFE instead of tearing down with class warfare. you dont like his compensation? fine dont buy Tesla stock. or short it. go to town. but YOU arent the arbiter of whats fair..... only TESLA SHAREHOLDERS can or should have any say.

SUN 2 DRV | 07. maaliskuu 2018

The group opposing his comp package also opposed the Solar City merger, and lost...

SamO | 07. maaliskuu 2018

Dana Hull is just reporting that "two of Tesla Inc.’s largest shareholders are supporting a plan to award Elon Musk a compensation package valued at $2.6 billion, a show of confidence in the electric-car maker’s bid to keep its visionary CEO around for the long haul.

Baillie Gifford & Co. and T. Rowe Price Group Inc., which combined own about 14 percent of Tesla stock, indicated to Bloomberg News that they’ll vote in favor of the board’s proposal at the March 21 special meeting."

https://www.bloomberg.com/news/articles/2018-03-07/musk-s-2-6-billion-aw...

carlk | 07. maaliskuu 2018

Pretty much what I said only people who don't own shares want to oppose it.

carlk | 08. maaliskuu 2018

Another point a major investor made today is this could incentivize Elon to use Tesla the vehicle for future ventures. That could be things from hyperloop, tunneling to AI that he could put under any company he wants to. AI is the biggie which could easily bring Tesla to $650 billion and beyond. All signs seem to indicate he does want to put this under the Tesla umbrella.

David N | 08. maaliskuu 2018

Voted yes here also.

David N | 08. maaliskuu 2018

.from OP “ The people deciding executive compensation are so far out of touch with the average American that they treat executive pay as Monopoly money”
1.Elon is not an avarage American
2. CEO’s are not your average American.
3. Who decided that Board of Directors are required to base compensation on the current “average American” .

OP, would you lower your annual salary if it exceeds the “average American” wage ?