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Elon Musk's Monstrous, Enormously Large Compensation Package

posted by Fnord666 on Friday March 23 2018, @12:49AM   
from the obscenely-large-package dept.

takyon writes:

If Elon Musk can increase Tesla's market value 12-fold in the next 10 years, he may be entitled to a maximum of $56 billion in stock awards (likely lower if more shares are sold to the public). This, along with the ballooning of Musk's existing $12 billion share in his company, and his stake in SpaceX and other companies, could help Musk become a Kardashev I trillionaire alongside Jeff Bezos:

A new payment plan for the CEO was approved by Tesla (TSLA) shareholders Wednesday, a spokesperson confirmed. The incentive-based package essentially states that if Musk hits a series of performance milestones between now and January 2028, and he drives his electric car company's market value 12 times higher — taking it from $54 billion to $650 billion — he'll become astronomically rich.

Now, if Musk does drive a 12-fold increase in Tesla's market value, that doesn't necessarily mean the price of a single share in the company will be 12 times larger. The company can do things like issue new stock that could dilute the value of existing shares. But let's assume Musk's Tesla stock would grow at least 10 times more valuable. That would mean just the shares Musk owns today would be worth $120 billion.

Plus, reaching the agreed upon milestones means Musk would get additional stock awards. According to the new compensation plan, Tesla estimates the value of the stock awards to be $2.6 billion, using accounting methods for estimating the cash value of stock options. But if Tesla's market value balloons just as the payment plan hopes, those stock awards could be worth nearly $56 billion, according to a public filing.

Also at Reuters, Fortune, and CNBC.

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Original Submission

• Re:Obscene: offending against moral principles Re:Obscene: offending against moral principles (Score: 4, Informative) by takyon on Friday March 23 2018, @03:17AM (3 children)

  by takyon (881) <takyonNO@SPAMsoylentnews.org> on Friday March 23 2018, @03:17AM (#657005) Journal

  https://www.reuters.com/article/us-tesla-ceo/tesla-shareholders-approve-ceo-musks-2-6-billion-compensation-plan-idUSKBN1GX0C0 [reuters.com]

  Compensation for the CEOs of large U.S. companies is typically approved by around 95 percent of votes cast in annual “say on pay” advisory votes. Musk’s potentially huge payout meant extra scrutiny. The vote total was 63,014,339 “for” votes and 23,407,632 against.

  John Trentacoste, partner at pay consultant Farient Advisors, said the 73 percent support level shows “there is support, but skepticism” among investors for Musk’s pay plan.

  Noting the 95 percent typical support level for CEO pay, he said Musk’s big payout has been roundly criticized. Ultimately the result, he said, “is not great comparatively, but for the amount of fodder that’s been around on this pay plan, I think it could be worse.”

  [...] CalSTRS is one of the nation’s largest public pension plans but only the 59th largest investor in Tesla, with a 0.13 percent stake.

  “Given the size of the award, we believe the potential dilution to shareholders is just too great. In addition, we have concerns about the lack of focus on profitability for the company, and the one profitability metric that is used excludes the cost of stock-based compensation,” CalSTRS’ Director of Corporate Governance, Anne Sheehan, said in a statement.

  Is it propaganda? Not really. The skepticism in Tesla is well-founded. They are selling expensive electric cars, can't hit production targets, and are going up against much bigger car companies who are starting to seriously produce their own electric cars. The company has probably lost the Chinese market [bloomberg.com].

  --
  [SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]

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• Re:Obscene: offending against moral principles (Score: 0) by Anonymous Coward on Friday March 23 2018, @04:06AM

  by Anonymous Coward on Friday March 23 2018, @04:06AM (#657014)

  I think most of the Teslas they're selling are going to Seattle where the last thing we need are more vehicles on the road. But, at least they're electric, so they're super efficient at running over the blind, elderly and homeless.

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• Re:Obscene: offending against moral principles Re:Obscene: offending against moral principles (Score: 0) by Anonymous Coward on Friday March 23 2018, @02:37PM (1 child)

  by Anonymous Coward on Friday March 23 2018, @02:37PM (#657127)

  Then he won't hit the targets and won't get the money. Where's the problem, again?

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  • Re:Obscene: offending against moral principles (Score: 0) by Anonymous Coward on Friday March 23 2018, @10:01PM

    by Anonymous Coward on Friday March 23 2018, @10:01PM (#657278)

    Pretty sure that was what was said about his previous pay package . . .

    Parent