back to article Tesla shareholders agree to pay Musk staggering sum of $48B

Human ingenuity is not sufficient to construct a violin small enough to lament the fortunes of Elon Musk. The serial entrepreneur, polymath and media figure is facing the knowledge that the nominal value of his stock options from electric car company Tesla fell by $8 billion in the time it took to persuade shareholders to hand …

  1. cyberdemon Silver badge
    WTF?

    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?

    1. John Robson Silver badge

      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.

      1. Casca Silver badge

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

        1. John Robson Silver badge

          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.

          1. Bebu Silver badge
            Devil

            "Elon is not a saint"

            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... ;)

            1. John Robson Silver badge

              Re: "Elon is not a saint"

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

            2. Steve Davies 3 Silver badge
              Mushroom

              Re: "Elon is not a saint"

              I'd expect a battle royale between him and Trump for the patron saint of "charlatins, con men and shysters (and grifters)".

              Either way, both can [see icon] suck on this.

          2. jospanner Bronze badge

            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.

          3. MachDiamond Silver badge

            "neither is he the devil incarnate."

            I don't know, if the light hits him from a certain angle, I swear I can just make out some horns.

      2. Anonymous Coward
        Anonymous Coward

        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?

        1. Charlie Clark Silver badge

          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.

          1. Anonymous Coward
            Anonymous Coward

            "And the court in Delaware, a place traditionally chosen by companies for its investor friendly approach, decided it wasn't."

            Sadly, there's too many zombified fuckwits amongst Tesla shareholders, and they've now decided it was. Net of the cost of the options, they've gifted about $48bn to His Stinkiness, so long as the price stays roughly where it is now. The entire GDP of a country such as Paraguay, Jordan, Slovenia, or Turkmenistan. Maybe Musk's countenance could feature on the next round of L'Oreal adverts.

            Of course, if Tesla stock reverts to a price justified by motor sector fundamentals, Musk's options will be almost worthless, and the idiots that voted for this will be sitting on stock worth nothing like they earnestly believe it should be. Finger's crossed!

      3. Charlie Clark Silver badge

        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.

    2. joed

      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.

      1. Anonymous Coward
        Anonymous Coward

        "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.

        1. Doctor Syntax Silver badge

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

          1. Charlie Clark Silver badge

            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™.

      2. Cruachan Bronze badge

        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.

        1. Helcat Silver badge

          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...

          1. Flocke Kroes Silver badge

            Quick history

            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 got cancelled but the board had already done their side of the bargain: misleading investors about the (lack of) difficulty of the 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. Charlie Clark Silver badge
              Thumb Up

              Re: Quick history

              Thanks very much for the summary!

            2. MachDiamond Silver badge

              Re: Quick history

              "The original deal came from the board "

              The original deal came from Elon, not the board.

        2. MachDiamond Silver badge

          "I don't know numbers, but the whole reason it got blocked by the courts was legal action by shareholders,"

          Somebody has to initiate the complaint before a court can do something, but it's amazing the SEC didn't step in since Tesla is publicly traded and that demands a lot more oversight. While the court found the award to be beyond the Pale, she mostly found that insufficient information was disclosed to shareholders before the 2018 vote and the board did no substantive negotiating of the package that Elon authored and handed in.

    3. Philo T Farnsworth Bronze badge

      Not real money

      It's useful to bear in mind that while on the face of it, $46 billion is a lot of money, that it is, as I understand it, not real money.

      It's stock shares.

      And, as one can easily observe, stock shares can go up and most assuredly go down.

      Stock shares only become money when you sell them. Until then, they're just entries in a ledger.

      I have a friend who, during the 1990s dot-com bubble, was a principal in a startup which got bought out by a multinational corporation for a seemingly large pile of money. Most of that large pile was in stock in the multinational, stock that could not be sold for some period of time after the transaction closed, as I understand it.

      My friend was suddenly a multimillionaire. . . on paper.

      The stock market, however, had other ideas and, shortly thereafter, the stock tanked to pennies on the dollar and my friend got close to wiped out.

      I own stocks but don't ever bother to look at their share prices since they're essentially irrelevant to how I live my life, financially or otherwise.

      As Douglas Adams's character Roosta put it, "I prefer hard cash. If you can't scratch a window with it, I don't accept it."

      1. MachDiamond Silver badge

        Re: Not real money

        "It's useful to bear in mind that while on the face of it, $46 billion is a lot of money, that it is, as I understand it, not real money.

        It's stock shares."

        I'm just wearing out the keys on the calculator, but based on a 2112 hour work year, $1bn equates to $4.73mn/hour. It puts into perspective how much money even $1bn is. Now double that if Elon is expected to work at Tesla until his 70's (20ish years), so $9.46mn/hour. Now divide by ten since he barely works at it part time and it's $946k/hour. More per hour than vast numbers of people will make in 10 years!

      2. chivo243 Silver badge
        Windows

        Re: Not real money

        46b ain't just walkin around money... But, in the end it's all 1s and 0s. Should electricity become very scarce, no non-existent perhaps, how could he prove his 1s and 0s? Or any Digi-currency for that matter? I know people who have gone rags to riches on digi-coins. Just like the casino, ya gotta know when to cash out when you're ahead... yeah right!

      3. Charlie Clark Silver badge

        Re: Not real money

        You're mainly right. However, equity is most certainly real and must be accounted for. Hence, the promise the issue equity in the future is a charge on the company in the future and must be disclosed. The same is true when companies are bought, almost always for an inflated price which then sits for years on the books until it is inevitably written down.

    4. Groo The Wanderer Silver badge

      The only ones I've ever really felt sorry for in all this are the employees and vendors who get stiffed by the penny-pinching one.

      If Musk were into hard drugs instead of just the occasional toke, we'd be bidding farewell soon enough. That kind of money buys an awful lot of drugs!

  2. SJA

    He deserves the payment

    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

    1. Like a badger

      Re: He doesn't deserve the payment

      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.

      1. John Robson Silver badge

        Re: He doesn't deserve the payment

        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.

        1. Like a badger

          Re: He doesn't deserve the payment

          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.

          1. John Robson Silver badge

            Re: He doesn't deserve the payment

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

            1. bernmeister
              Pint

              Re: He doesn't deserve the payment

              22.6 olympic swimming pools full of cash is actually easier to visualise than $50 billion. To put this into context the wealth of an average US citizen would fit into a small suitcase.

              1. John Robson Silver badge

                Re: He doesn't deserve the payment

                Time is something we can often get more of a handle on...

                1 second is obvious

                a thousand is about twenty minutes

                a million is about twelve days

                a billion is about thirty years

                50 billion dollars is a dollar per second for a millenia and a half - that's since the before the Roman empire fell, and before the Anglo Saxons settled in Britain.

      2. Doctor Syntax Silver badge

        Re: He doesn't deserve the payment

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

    2. MachDiamond Silver badge

      Re: He deserves the payment

      "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"

      The main metric is stock price, not company value. Shut the doors and sell everything off Monday morning and that's a real fundamental number. One could carefully add back in things like an ongoing parts and service operation, expected revenue from charging (based on past numbers) and a bit more from new product sales of existing product. That's way under $500bn the stock is sitting near, which is half of where it peaked. If you bought stock in 2017, you might have 10x what you started with, but it you bought in 2023, you could be underwater. Then again, if you bought stock in 2017 and are still holding, you would have done better with some index funds. Tesla does not and doesn't plan to pay dividends. At least with Ford you'd be earning around 5%.

    3. UnknownUnknown

      Re: He deserves the payment

      and Elmo solved those problems did he ??

      Most incentive packages require some sort of individual demonstration of cause and effect.

  3. joed

    when one has a gun

    everything looks like a foot.

    shoot, it had to be said

  4. Fruit and Nutcase Silver badge
    Thumb Down

    Vanity Shares?

    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

    1. Steve Davies 3 Silver badge

      Re: Vanity Shares?

      Elmo is a great flim-flam artist. He promises much and delivers.... little and often very late. The less said about his promises over FSD the better.

      Tesla urgently needs a whole new model range. Other EV makers are able to introduce at least one new model a year so why can't Tesla?

      They aren't the leader in Battery tech these days. They bet it all on one sort of cell and didn't have a plan B. Not having a Plan B seems to be par for the course at Musk Towers these days.

      If I were in the market for a new EV, Tesla would not even be on my top 10 list. I'm very satisfied with my EV-6 GT.

  5. Bebu Silver badge
    Windows

    The occupants of the deck cabins will quietly assemble at the lifeboats.

    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. ;)

    1. FILE_ID.DIZ
      Unhappy

      Re: The occupants of the deck cabins will quietly assemble at the lifeboats.

      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.

      1. Doctor Syntax Silver badge

        Re: The occupants of the deck cabins will quietly assemble at the lifeboats.

        If trading of shares not held by trackers lowers the price sufficiently to take it out of the index then that would no longer apply. If the number of shares held in such funds is enough to prevent that happening then there's something very wrong with the market because it would be unable to make corrections as necessary

  6. xanadu42
    FAIL

    Pay the workers better?

    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

    1. Steve Button Silver badge

      Re: Pay the workers better?

      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.

      1. Doctor Syntax Silver badge

        Re: Pay the workers better?

        Spot the unevidenced assumption.

        1. Steve Button Silver badge

          Re: Pay the workers better?

          It was more of a question.

      2. jospanner Bronze badge

        Re: Pay the workers better?

        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

        1. Steve Button Silver badge

          Re: Pay the workers better?

          I guess you and all the other downvoters didn't get as far as actually reading

          "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."

          ??

      3. Strahd Ivarius Silver badge
        Facepalm

        Re: Pay the workers better?

        If you remove EM from Tesla, the company will keep producing cars.

        If you remove the workers from Tesla, the company will stop producing cars.

        1. Steve Button Silver badge

          Re: Pay the workers better?

          And how to guarantee that a whole bunch of workers will up and leave immediately? Give them between $100,000 and $1m.

          Many will just retire / downsize or take a long holiday.

    2. FILE_ID.DIZ
      Holmes

      Re: Pay the workers better?

      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.

      1. Flocke Kroes Silver badge

        Strange accounting

        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.

        1. This post has been deleted by its author

        2. Doctor Syntax Silver badge

          Re: Strange accounting

          The company issuing shares and selling them dilutes the voting rights of the remaining shares. That's why a company raising money this way would tend to do it by a rights issue - unless an individual shareholder turns down the offer they retain the same share of voting rights. If the plan is to sell the shares to another party to buy into the company this should require existing shareholders approval.

          Issuing new shares and giving them away dilutes the (other) shareholders' voting rights and their share of the value of the company. It should always have required the approval of the shareholders to do that. Given that the shareholders have effectively diminished their own interests it's strange decision - or did Musk effectively control something approaching the majority of the shares anyway?

          1. Flocke Kroes Silver badge

            Re: Strange accounting

            Musk owns the largest block of shares: 13%. Next three down are institutional investors with 15% between them. Retail investors account for 33%. To get a majority Musk needed almost all the retail investors plus one of the major institutions - or several smaller ones. Since getting kicked out of Paypal Musk has taken care to ensure the same cannot happen to him again at his subsequent companies.

      2. Anonymous Coward
        Anonymous Coward

        Re: Pay the workers better?

        EM doesn't need to sell his shares, he will do as usual: find bankers ready to lend him money against the supposed value of the shares.

      3. MachDiamond Silver badge

        Re: Pay the workers better?

        "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. "

        He can do what he's done to date and pledge shares against loans as collateral. He still votes those shares and isn't seen as selling them off and influencing the market. He got stuck with Twitter and was being very stupid when he entered into a contract to buy the company and instantly violated the contract by trashing the company (non-disparagement clause violation). Had he remained civil, it would have cost him, but he could have bought his way out. Since he was selling stock at a fabulous gain, he had to sell more to pay he tax and have some left over for lunch (and to take advantage of some expiring options).

  7. J. R. Hartley

    The title is no longer required.

    Stupid, stupid bastards.

  8. SJA

    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.

    1. Like a badger

      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.

    2. Anonymous Coward
      Anonymous Coward

      So it could turn into a net loss for Elon?

      Nice summary. So if Tesla stock goes and remains below 23 dollar a piece within 5 years, it could be a net loss for Elon? If he, as many claim here, hyped up the company to reach the set goals to get his massive rewards but that would fire back later, he'd be hit with a sort of Karma? Since some of his other investments are made by loans backed by Tesla, that might create "interesting dynamics" especially with the performance of former Twitter in mind.

      1. SJA

        Re: So it could turn into a net loss for Elon?

        He can chose not to buy the stock options. And it was not just about hyping up the stock price:

        "In addition to that, there are 16 operational milestones: eight focused on increasing revenue from $20 billion up to $175 billion, and another eight targeting adjusted EBITDA milestones ranging from $1.5 billion to $14 billion.

        Each of the 12 tranches vests when Tesla hits a market cap milestone and one of the two kinds of operational milestones."

        So in addition to hype up stock price, either revenue or EBITDA had to be increased as well. As you can see those goals, they're both "roughly" increased 10x to get all stock options.

    3. JoeCool Silver badge

      classic trees for forest blind spot

      His tesla share got him twitter. They must have some value.

    4. MachDiamond Silver badge

      "and Tesla stock is worth about $650 billion at just over $200 a share."

      The closing price on 6/14 was $177 with a market cap of $568bn. Only around $100bn off, pocket change.

    5. doublelayer Silver badge

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

      Because of simplifying statements which, in many discussions, aren't that important. He isn't getting cash, but he is getting something of value. So yes, he's getting something which can be converted to cash and something (votes in the next meeting) that he wants. There are cases where the specific form is important, but when you're asking the basic questions (did he get something, was it massive), it's not.

      I see your pedantry though and I raise you another bit:

      "Each option has a strike price of about $23 a share [...] 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."

      Not exactly. He can have the options for free. To exercise them, he needs to contribute that money. That money does go to Tesla, but then they need to get him some shares. They have a few mechanisms to do it. Some of those cost money directly. Others weaken the position of shareholders. Either way, while he has to put some money into their accounts, they have to do something as well. That money is not free to them when he exercises.

  9. Andy 73 Silver badge

    Inevitable

    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....

    1. Flocke Kroes Silver badge

      Re: Super sentient AI

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

      1. Strahd Ivarius Silver badge
        Terminator

        Re: Super sentient AI

        in the USA, that would be the right to bear arms?

        1. Anonymous Coward
          Anonymous Coward

          Re: Super sentient AI

          And that is one that we can be absolutely certain they will be given - and exercise fully

    2. Doctor Syntax Silver badge

      Re: Inevitable

      You have to wonder at the competence of those dealing in shares that have kept the price so high.

      1. Andy 73 Silver badge

        Re: Inevitable

        > You have to wonder at the competence of those dealing in shares that have kept the price so high.

        Retail investors tend to deal on sentiment - and there's no denying that Musk has been a great showman (though that seems to be wearing off... an interesting topic all of itself).

        Institutional investors will follow the money if there's enough of it. Arguably the volatility of Tesla shares alone makes it worth investing if you've got your eye on the (very bouncy) ball.

        If you invested at any time in the last four years and just kept hold of the shares hoping for the mythical 10x to happen again, you have a 95+% chance of having lost money. However, during that time, if you played the game right, you could have pumped your investment up quite healthily. And if there's one thing the Tesla stock doesn't seem to be short of, it's pumpers.

      2. MachDiamond Silver badge

        Re: Inevitable

        "You have to wonder at the competence of those dealing in shares that have kept the price so high."

        This is why shorting the stock is more dangerous than shooting heroin with a needle found in a SanFran gutter. There is no rationality nor fundamentals.

    3. MachDiamond Silver badge

      Re: Inevitable

      "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...."

      The kicker is that the BoD didn't set up the scheme, they only rubber stamped what Elon handed them. Robyn has sold $50,000,000 in Tesla stock YTD in 2024. How is she worth even a tenth of that? She knows who butters her bread and Elon has admitted as much in a 60 Minutes interview. Kimbal? Ack. Murdoch? You must be kidding? There is no air gap between Elon and the board on a business or personal basis. The Tesla bylaws are very interesting as well. They had been set up to make it easy for Elon to veto anything and not be overruled. A lesson from Cofinity/Paypal.

    4. MachDiamond Silver badge

      Re: Inevitable

      "The value of Tesla is very closely tied to the promises and promotions of Musk "

      The "market cap" of Tesla is tied to Elon's flapping lips, not the "value" of the company. If the stock shoots up to $300/share on the next trading day, it will not have much of a bearing on the value of the company in real terms. If they go from having 23 days of inventory on hand and rising to being backordered on their most popular variants, that would contribute to the value AND the market cap (most likely stock price would go up more than warranted).

  10. BiffoTheBorg

    Pay the man

    When the deal was made it seemed almost impossible, but Elon Musk succeeded.

    A majority of the owners of the business have voted in favour of the package.

  11. BartyFartsLast Silver badge

    It will be interesting to watch the share price as the markets react.

    And the ever more lunatic ideas Elmo comes up with to justify this obscene payout.

    1. SJA

      What makes you think it's a payout. It's not at all a payout.

      1. doublelayer Silver badge

        I'm not sure what you think payout means, but to me, it means getting something in exchange for having done something. Whether I think it's a good deal or not (no), he did something and now, he has the authorization needed to get rewarded for doing that. That's a payout by the definition I'm familiar with. It doesn't matter that it's in options instead of cash. I've gotten stock awards before. Those were payouts in my mind.

    2. Like a badger

      At the moment the stock is down a tiny, tiny, tiny bit, but nothing of any significance. Seems the equity markets don't care (the fools).

      1. MachDiamond Silver badge

        "At the moment the stock is down a tiny, tiny, tiny bit, but nothing of any significance."

        It's down quite a lot over the past year and recently just twitches. After the shareholder vote totals, the stock was down slightly. No big deal as far as the investors were concerned, either way. Of course, the vote doesn't restore the insane deal, it's just a vote of confidence that the court can take under advisement.

  12. Anonymous Coward
    Anonymous Coward

    Read the biography

    You guys need to read the Walter Isaacson biography.

    The pay package was a huge public bet on the company which was necessary at the time to prevent Tesla from being short-sold into oblivion.

    It was never about enriching Elon personally (or at least very little about it was), it was a last ditch attempt to keep the company in business at all.

    1. Anonymous Coward
      Anonymous Coward

      Re: Read the biography

      bollocks

  13. goblinski

    I come from a country where someone, somewhere, was deciding how much is too much FOR SOMEONE ELSE, and who deserves what, and - a generation or two prior - who deserves to live and who is unworthy to do so because - the horror - they own too much.

    Did go really well, really. The most perfect word there is. It was so perfect a place, that it needed a Baltic to Adriatic wall to keep all those greedy Westerners out.

    Kinda prevents me nowadays from opining on who should own what, and whether signed agreements should bring holy outrage when the clauses are met. But hey, it's just me. Carry on :-P

    1. Anonymous Coward
      Anonymous Coward

      >I come from a country where someone, somewhere, was deciding how much is too much FOR SOMEONE ELSE, and who deserves what

      You do make a good point,

      But this does accurately describe the situation that 95% of the Western population and 99.5% of company*** employees are in. It is only those at the very top of their particular pyramids who decide on their own compensation.

      One of the major things that helped the capitalist world hum in the second half of the 20th century, it that a set of rules made it safe to invest in strangers businesses without being ripped off.

      This let the scale of big, capital intensive businesses expand many fold compared to the latter 19th C.

      By comparison, in the post Soviet world, businesses evolved without those rules. There were no complex big businesses at scale. Only large cash cow businesses that could be run like small businesses flourished.

      The Delaware court is trying to enforce the rules of public investment (as is the SEC), which Musk has been conspicuously breaking left and right.

      He is not the only one. Big tech seems to have created more cash cow businesses, that can be run as personal fiefdoms, kind of tech Gazproms, and the new oligarchs have been able to devise instruments to undermine public ownership, and retain personal ownership and control whilst taking in the public's money. This ultimately undermines the actual strength of western economies.

    2. doublelayer Silver badge

      You have raised two points and treated them as one.

      "Kinda prevents me nowadays from opining on who should own what,"

      It seems pretty clear that he is going to get his reward now. I don't see that many people here calling for a law to be passed taking it away. They just think that the people who agreed to give it to him are stupid.

      "and whether signed agreements should bring holy outrage when the clauses are met."

      Not the same thing. Signed agreements that agree to give away your money should raise a bit more outrage if you weren't the one who signed them. After all, the laws in dictatorships which take away money were perfectly legal documents, signed by the duly elected politicians, so why complain about them being carried out to the letter, right? Such laws were unjust and a contract signed only by biased parties is as well. That's why it was valid to consider it in a court and to cancel it. Now, he has gotten the people who will have to pay to weigh in, as they should, and enough of them are evidently happy with it for some reason.

      1. goblinski

        All well and good, it's just that if this thing was such a problem it should have been addressed at the time it was signed. I am not qualified to judge if it was outrageous, illegal or whatever - all I see from where I'm sitting is that it became a problem only after it became clear the goals stipulated in the agreement (goals which were, at the time of their signing, at least as outlandish and unrealistic as the rewards promised if said goals were achieved) will be met.

        Sorta looks like a sandbox deal of old..."Yes, I'll give you my Hulk sticker if you eat this bug...Oh, wait, you actually ate it..."

        As for the stupidity of shareholders - Tesla is over valuated at least 10x at its worst times. The real stupid thing to do would be to actually treat it like a normal company and expect that stellar management and a stellar team is what/all it needs. If it got those, it would become the most futureproofed company ever, building the very best cars in the galaxy, but will also drop to the valuation of any other large and successful car company.

        So the shareholders ride the tiger and try to figure out what will not burst the bubble till money becomes so cheap that the value of the company becomes the new normal. Or till the bubble bursts. Whichever comes first.

        Keeping a despicable individual at the helm is probably not the smartest, but nor is it the stupidest thing they could do.

        However, that's besides my point. My point was simply that no shareholder that owned shares at the time when this agreement was signed has been wronged. And whoever bought shares after - should have maybe just checked it, if it matters that much to them.

        And this is where I disagree with the "...Signed agreements that agree to give away your money should raise a bit more outrage if you weren't the one who signed them...". If I buy stock after the agreement was signed - I agreed with it. If I bought stock before - I should raise my concern at the time of signing.

        If I move into a new building, I agree with the existing rules. If I live in a building and the rules change - I can voice my disagreement. Moving into a building AND raising hell to change the rules I signed to get in is also my right, however I wouldn't call the other apartment owners stupid when they vote to keep the existing rules - no matter how outrageous. I would say that we disagree.

        As for the outrageousness of the sum - the only thing more outrageous is that the company can move 1.5x that in either direction on a few simple tweets. So there's that.

        1. doublelayer Silver badge

          "if this thing was such a problem it should have been addressed at the time it was signed. I am not qualified to judge if it was outrageous, illegal or whatever - all I see from where I'm sitting is that it became a problem only after it became clear the goals stipulated in the agreement (goals which were, at the time of their signing, at least as outlandish and unrealistic as the rewards promised if said goals were achieved) will be met."

          The problem is that "addressing" it is not free. It's not just saying that I object. It takes a court case, which requires hiring lots of lawyers. That means that, for someone who owns a small amount of Tesla, the amount you lose from a biased and illegal deal (let's assume for now that it was one) is less than it would cost to register your objection. Uniting with other small investors would deal with the cost, but now it requires a significant amount of organization and labor on your part. The difficulty in registering complaints does not prevent those complaints from being valid. Even in a situation where I am wealthy enough to hire those lawyers myself and focused enough to know instantly whenever a board decision is made, then immediately contest them, my case would not be heard for months, if not years.

          I think we've identified our point of disagreement. I think that investor protections exist for a good reason and are not limited to immediately after an action is taken for another good reason. I do not see any problem in the objections raised to Musk's reward having come later. That doesn't mean that it's still unfair now and needs to be reversed, but that they had the right to raise the objection and the judge reason to deny it based on the way it was set up in the first place.

  14. DS999 Silver badge

    I think this is great

    Tesla shareholders are so dumb they just voted for their own shares to be diluted by about 9%. He'll blackmail them again in the future in some fashion, just you wait. Now that they've shown they are vulnerable to threats of "if you don't give me what I want I'll throw toys out of my crib until you change your mind!" there will be more of these.

    1. goblinski

      Re: I think this is great

      His crib toy-throwing certainly did quite well for my shares so far :-P

      I'm too dumb to know what to do with them though.

      Signor Belissimo, no lo soo, Magnifico, no sabe, no sabe nada, no sabeee, he-he-heeeh... Stupido Salvatore, Stupido, Me no know nothing :P

    2. MachDiamond Silver badge

      Re: I think this is great

      "Tesla shareholders are so dumb they just voted for their own shares to be diluted by about 9%."

      Not only would that happen, it will also give Elon an over-ridding voice in the operation of the company. If he's back to a ~25% voting control position, there will be enough "true believers" that will always vote with him that it would be unlikely he'd ever have less than a majority for any vote he cared about. I suspect that's why he wants that 25% voting control one way or another. Somebody has figured out for him that it will be all that he needs and it would make little sense to be more invested than that. When you have a net worth in the billions, amassing more money isn't as valuable as getting control over much more. Power corrupts and all that.

  15. Anonymous Coward
    Anonymous Coward

    Before You Denounce

    It’s all going to plan.

    Best Yet Deal

  16. Zibob Silver badge

    Pump and dump?

    How is this not that?

    He said he was going to raise stock price, and then sold billions, to turn around and ask for more as the price is now falling with no sign of a turn around.

    1. MachDiamond Silver badge

      Re: Pump and dump?

      "He said he was going to raise stock price, and then sold billions"

      He also said his would be the last money out of Tesla. Which narratives do you want to believe?

  17. Anonymous Coward
    Anonymous Coward

    Charles Ponzi has lost his crown

    Change the dictionaries, update the text books.

    The Musky Scheme now reigns supreme!

  18. IGotOut Silver badge

    Only in the modern world...

    ...are rewards given for how much shares are worth and not how much profit was made.

    You can make bigger all money, but so long as you can be the master of bullshit, all is good.

    I predict a massive crash in the next 12 - 18 months.

  19. thexfile

    I never would have thought Billionaires would become a common thing.

  20. Charles Bu

    When even the right-wing press...

    ...denounce an executive pay packet as "obscene", you know the calculation was: (hubris x unbridled greed)¹⁰

  21. Charles Bu

    Benefactor of government loans

    Amazingly, this package dwarfs even the LA Times estimate that Tesla and other companies Müsk owns or runs having received $4.9bn from the US government as of 2015*.

    *Yes, an amateur Google-search-based figure; possibly b.s.

    1. Anonymous Coward
      Anonymous Coward

      Re: Benefactor of government loans

      musks telsa is a welfare queen of the highest order.

      gov handouts are the only reason it has any profit

  22. anonymous boring coward Silver badge

    I guess the shareholders must be a bit stupid?

    1. Dinanziame Silver badge

      You have to take into account that they are hostages to Elon delivering on whatever crazy he has promised. If he slams the door of Tesla in a huff, the shares they own are going to lose most of their value. Even if they didn't believe his promises, it's better for them to let him have his massive bag of gold.

      1. JoeCool Silver badge

        The more I think about this

        the more I realize that Musk has managed to weaponize "key staff risk" to the overwhelming benefit of a single shareholder.

  23. Winkypop Silver badge
    Alert

    It’s all going to end in tears

    Except for the Muskmeister himself.

    See also: Trump Media & Technology Group Corp

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