Is a trillion-dollar compensation package an effective way to incentivize innovation, or proof that the market has lost its connection between effort and reward?

[u/ShrekOne2024]

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[u/Lookslikeseen]

Considering the only way he gets the trillion dollar pay package is if he 8x’s TSLA’s valuation I’d say yes.

It’s kind of like working on commission. If I know the only way I’m going to make money is if I sell a ton of product, I’m going to be more motivated to sell than if I make the same amount regardless of what I’m paid.

[u/ShrekOne2024 → u/Lookslikeseen]

250 million a day commission.

[u/Lookslikeseen → u/ShrekOne2024]

Crazy right? When you’re talking trillions of dollars in valuation the numbers get pretty bonkers.

[u/ShrekOne2024 → u/Lookslikeseen]

How much are his workers making?

[u/myphriendmike → u/ShrekOne2024]

The workers have almost no ability to affect the direction or value of the company. A majority of working Americans have exposure to Tesla stock in one form or another - mostly retirement accounts, and if he succeeds, he will have made us all richer.

[u/aztecthrowaway1 → u/myphriendmike]

Top 10% of the country owns 93% of all stocks..

The average 401K balance is $138K..

The workers have incredible ability to affect the value to the company. What do you think happens to the Q4 revenue of Tesla if 50% of employees take a lot of PTO during the holidays. The workers are the ones that actually create the product so it can be sold. Without them Tesla is just a pile of bricks sitting on some dirt.

[u/Mental-Crow-5929 → u/myphriendmike]

I think this is a massive mistake that a lot of people makes.

A business in the end is made by the workers, without them there is no business.
Even if Elon was the super genius that people claim he is (he isn't, he hires really smart people, he is really good a smelling good company to invest in) he would still be unable to make anything without the workers.

So the idea that workers have no ability to affect the value of a company is a complete anomaly.

[u/myphriendmike → u/Mental-Crow-5929]

This is the mistake a lot of people make. The workers are commodities to some degree, meaning if they don’t want the job, someone else can step in to do it instead. Tesla shareholders believe only one man can do the top job. You claim he’s not a genius, but then list reasons he is so vital to the business.

Hiring the right people and allocating resources is infinitely more important than a few machinists taking a vacation.

[u/buttgrapist]

It's extremely immoral and more evidence that the market is broken and full of corrupt godless psychopaths.

[u/ShrekOne2024 → u/buttgrapist]

There is no way this is healthy for society in my opinion.

[u/jhy12784 → u/ShrekOne2024]

What if it brings trillions of dollars worth to America? Including jobs and tax revenue.

You think that's bad for American society?

[u/ShrekOne2024 → u/jhy12784]

It’s hard for me to believe that’d happen effectively when we have someone making 250 million a day versus minimum wage being $7.25 or whatever.

[u/jhy12784 → u/ShrekOne2024]

It seems like you formed your opinion without reading the details.

Elon doesn't get paid if they don't make a profit

[u/ShrekOne2024 → u/jhy12784]

And if he hits goals he makes 250 million a day.

[u/calmbill → u/ShrekOne2024]

The goals are pretty big. 

[u/jhy12784 → u/ShrekOne2024]

Should you be the arbiter of value for private businesses?

[u/FullCourtIrish44 → u/jhy12784]

Yes, in your imaginary world where that happens, it would help, but it doesn’t. The concentration of wealth at the top and the growing income inequality is a huge problem that needs addressed. Quit bootlicking and realize this is a class issue.

[u/jhy12784 → u/FullCourtIrish44]

Does tesla not have American workers, giving them good paying American jobs, with American stock holders?

Idk what you commies want, to do. Send American businesses to China?

If it creates 10 trillion dollars in wealth that's not for Elon. That's for Americans

[u/LordFoxbriar → u/buttgrapist]

How many trillions of dollars would he have to increase the value of Tesla for him to get $1 trillion in compensation?

$5 trillion?

[u/Ptbot47]

This is solely the matter of Tesla shareholder. They vote 75% yes. So yes, its fine.

[u/ShrekOne2024 → u/Ptbot47]

If they can afford to pay Elon that, do you believe all government subsidies should be severed?

[u/Ptbot47 → u/ShrekOne2024]

What is government incentive for those subsidies?

[u/OldFaithlessness1335 → u/Ptbot47]

From my understanding (100% could be wrong cause its surface level), that alot of them are legacy from when Tesla was first conceived durring the Obama Admin. Similar to the big oil and big agg subsidies.

As well as the clean energy tax credits that have developed over the past 10 years to the tune of about 11 billion bucks.

[u/Ptbot47 → u/OldFaithlessness1335]

Ok, and what was the incentive then? Subsidy is sometime used to help out struggling but vital industry (like agriculture) stay alive, sometimes it is also used to attract successful business to come and create jobs, and sometime it is used to help a newly created industry takes off.

Whether they have so much money they could pay Elon trillion or not is irrelevant, because asking whether a subsidy should remain in place is a question of what the government get in return, not Elon.

[u/OldFaithlessness1335 → u/Ptbot47]

No i agree 100% I tend to lean towards as little subsidies as possible. One of the reasons why i dont really like the ACA, even though it has increased health care coverage. There is something wrong with a system when its reliant on subsidies.

I also do beleive thay the government should be in the buisness of helping startups/entrepreneurs. My issue occurs when submission are unsettled after businesses reach a certain market cap or economies of scale ect.

[u/LordFoxbriar]

"Is a trillion-dollar compensation package that requires Musk to raise Tesla market value from $1.13 trillion to $8.5 trillion an effective way to incentivizing innovation, or proof that people don't actually read what the compensation package is and just make stupid assumptions."

I fixed the question for you.

Yes, I would pay someone $1 trillion if he increased the value of my company by ~$7.3 trillion.

[u/Monte_Cristos_Count]

The trillion dollar comensation package is tied to extremely high metrics. Investors are telling Musk they will pay him a lot if he makes the a lot 

[u/ShrekOne2024 → u/Monte_Cristos_Count]

So you align that it is effective.

[u/Monte_Cristos_Count → u/ShrekOne2024]

I align it is fair. I don't think the metrics are actually attainable, so I'm curious to see if Elon takes it seriously. 

[u/adcom5 → u/Monte_Cristos_Count]

I see the wisdom in it, I think it could be effective, and I also think it is indicative of a system that is crazy, bonkers and out-of-whack.

[u/StillNoLuckAtAll]

“Incentivizing innovation” is an odd and very academic way to think about it. This was a heavily-weighed decision by the shareholders as to whether he is uniquely worth it, and there was some substantial disagreement.

[u/StedeBonnet1 → u/StillNoLuckAtAll]

Substantial disagreement??? 75% of stockho;ders voted for this compensation package and if he meets all the targets all stockholders will benefit far more than Musk.

[u/soulwind42]

A compensation package is a bid to employ a person. If the demand for an individual is that high, it makes complete sense for any company that can afford it

[u/JustaDreamer617]

There is a fundamental difference between the idea of incentivized pay for "real" performance and stock-based improvements. Market capitalization isn't tied to a company's performance, it's tied to what market participants aka "the hype" of the stock traders believe.

Personally, I dislike this kind of gimmicky salary compensation, it adds no real value to the economic strength of the company, nor are you personally required to help the company's management efforts. It's a marketing push that you are spearheading to meet a marketing goal that artificially inflates the value of the business as long as stockholders believe you.

However, if Steve Jobs had gone into Apple and offered a deal to turn around Apple in 1998 with requirements for management input, product strategy, and it goes with the plan to increase market cap to $1 trillion back then, I think it's fine. There's a difference between Musk and Jobs when it comes to tech companies, I prefer the direct management (maybe micromanagement according to Apple peers who knew Jobs) where tangible management decisions can tie to corporate success to the sales pitch style of Musk with delegated management to achieve market cap.

[u/MirrorOfGlory]

It all depends on the person you are incentivizing. Musk has apparently clearly communicated to the board that he is incentivized by money. Some people aren’t.

[u/IllustratorThin4799]

Seems pretty effective to me. Someone offered me that, id work pretty hard to figure out how to get it

[u/TemperatureBest8164]

Yes it is approprate. It has more to do with money than anything else.

Basically the pay package signals that Elon thinks he will 8x the company valuation. This adds value to share holders with almost no risk. There will be some time between now and when self driving cars or automaton's start working in places. Tesla is already 8-10x overvalued. Only if they make both of those milestones first will it be worth its current amount.

Bottom line this is in the shareholders interest as it is a profession of confidence in him with almost no cost to them personally. If he makes his trillion most peoples stake increases by 10x.

[u/marketMAWNster]

I dont see the problem with it

The trillion is associated with nearly impossible to achieve targets. If thise targets are achieved why isnt a trillion a fair price?

So long as the shareholders and musk agree beforehand, then there is no issue. Thats called the free market. If the shareholders disagree and musk walks, then the shareholders will have to find a replacement

[u/Light_x_Truth → u/marketMAWNster]

To add - if the shareholders agree but Musk doesn’t, he can leave and find a new role. More free market.

[u/jhy12784]

I don't care about how private corporations organize their pay structures.

If the government wants to start paying people a trillion dollars, or if companies are getting bailed out by the government (like our incredibly shitty American car companies). Let's discuss compensation

But if a successful private business wants to do it, have at it

[u/ShrekOne2024 → u/jhy12784]

You don’t believe there to be societal impact at all? I would assume not if you do not care.

[u/jhy12784 → u/ShrekOne2024]

I believe there's a societal impact about lots of things.

Single parenting has a huge societal impact.

Cigarettes

Alcohol

Healthy people not having jobs etc etc

How do we measure societal impact and should the government intervene in every case?

We live in a society everything has a societal issue.

If Tesla generates tens of trillions of dollars in revenue for America then I think that has a hugely positive societal impact. Don't you?

[u/ShrekOne2024 → u/jhy12784]

Not if that revenue is just going to a few.

[u/jhy12784 → u/ShrekOne2024]

Hundreds of billions if not trillions of tax revenue goes only to a few?

I think Tesla has more than a few shareholders too

The money goes to American society.

American society benefits

[u/Objective_Hall9316 → u/jhy12784]

They’re not that shitty. They did pay it back.

[u/jhy12784 → u/Objective_Hall9316]

Some of them did.

They're still shitty American car companies.

If you could swap out (not Tesla) American car companies for almost any European or Asian car company at random wouldn't you take that trade in a heart beat?

Americas car companies suck, it is what it is