Elon Compensation Package

[Buckminster]

https://twitter.com/x/status/1746999488252703098

 

[Cosmacelf]

Yikes. Elon just can’t negotiate behind the scenes can he?

 

[Buckminster]

https://twitter.com/x/status/1747004702603014355

Could the board create shares with 100x voting power?

 

[Cosmacelf]

Could the board create shares with 100x voting power?

Pretty sure that would require a shareholder vote.

 

[Christine69420]

Pretty sure that would require a shareholder vote.

Wouldn't that vote be easily met? Shareholders would prefer to give up voting power and not have to give away valuable ordinary shares?

 

[MC3OZ]

There are 2 halves to any negotiation.

To unlock the higher rewards from any package, there may be a few requirements:-

• Tesla bigger than Apple and ARAMCO combined.
• 1 Million profitable working Optimus Robots.
• 1 Million profitable working FSD Robotaxis
• 20 Million vehicles produced annually,
• Inhouse battery cell production of 1 TWh per year
• Dojo as a service.

If both sides get everything that they want I am happy, but in order to be rewarded, Elon needs to deliver.

Elon has some idea of what is coming, I think that is why he is negotiating now.,

 

[MC3OZ]

Control over the future direction of AI is one consideration.

It may be possible to make the AI portion of Tesla a subsidiary with a different shares, hence a different voting arrangement?

The AI genie is well and truly out of the bottle, if Tesla doesn't do it, many others will, Elon can't control all of them.

Doing AI at Tesla is the fastest path to success, and that might help limit the power and influence competing AI solutions have.

Aside from control over AI, remuneration is his highest concern, probably because he also has big plans for his other companies.

.....
AI & Robotics were not a big part of his previous compensation package.... perhaps he only wants 25% voting rights on AI & Robotics,

 

[JerryDuke]

Think he wishes he had the shares he sold to buy X?

 

[MC3OZ]

It IS sort of comical; Elon keeps talking AI and robotics, yet both conspiculously missing from the mission statement. Maybe after all this comp plan drama, when the dust settles, the mission state will be updated.

That is part of it...

IMO things have changed since the last compensation package was negotiated and all milestones hit.

Elon is focused on the future direction. including AI & Robotics, and that is a bigger more diverse company than was envisaged at the time the last comp package was negotiated.

And it might be time to update the mission statement, especially if it seems like the mission is about to be achieved.

In many negotiations a win for all affected parties is possible,,, Elon knows that many employees are shareholders, and that retail shareholders have backed the company during difficult times in the past.

 

[heltok]

X-post from main thread:

I will do the translation of this post from asperger language to neurotypical language.

Elon is worried about the future because he cares about humanity. If Tesla becomes the leader of robotics and AI, Tesla will be very powerful. AGI might be the demon that kills us all and should be done carefully. Robots might do a lot of the warfare and could end up killing humans. A lot of economic value will be capture by the company making/owning the robots.

If Elon helps Tesla becomes the leader in this important technology without Elon having some amount of control of this, he will feel uncomfortable because he doesn't want to help end humanity and do harm or cause some misaligned people to have a great influence. Unlike Larry Page, e/acc and lots of the AI-field who are happy to kill off humanity if that means that AGI is now expanding across the universe.

So what does that mean for you who only care about yourself?
1. Elon thinks Tesla might be worth a crazy amount
2. Elon wants you live a long and happy life
3. Many other people in the industry want you to die and are working hard to get there
4. If you want a good future for yourself, you should consider supporting Elon having a 25% voting share. If this is done by giving his stocks a higher voting weight or giving him more common stocks is another question.

Here is Elon confirming that he would be okay with 25% voting but not ownership, but that might be difficult to achieve:

https://twitter.com/x/status/1747077753885618447

So I guess we are back to 25% ownership...

 

[kabin]

If Elon owns about 13% of the outstanding shares of Tesla stock he would need to double his share count and he's loaded down with X already. Whatever the plan, creating extra shares should drop TSLA's stock price.

It sounds like more Elon-created drama. Even if the free world agrees to AI restrictions, nut job dictators and 3rd world countries alike will have free reign. And the way the Tesla AI team has been flailing with FSD etc it's probably a better idea to bring someone else in. It's time for Elon to move-on.

 

[Buckminster]

https://twitter.com/x/status/1747034941185982481

https://twitter.com/x/status/1747035106257023362

https://twitter.com/elonmusk/status/1747042543307788639?s=20

https://twitter.com/x/status/1747078661923098690

https://twitter.com/x/status/1747088099828445637

 

[Buckminster]

Possible alternative:

Spin-off Optimus company:
Elon owns 30%
Tesla own 50%
IPO remaining 20%

Not great for existing shareholders

 

[Buckminster]

https://twitter.com/x/status/1747008639649411487

 

[Buckminster]

I'm having a BIT of trouble seeing how there's that massive a difference between 20.6% of voting shares (what he has right now- and as a reminder that was higher before the twitter $ raising) and 25% in terms of how much control that gives you exactly to where one would leave him unmotivated to develop anything new for the company and the other has him totally engaged in doing so.

Is there some corporate rule I'm unaware of where 25% is a really significant threshold?

Adding another class of shares would cause TSLA to be removed from the S&P500...

There are 2 halves to any negotiation.

To unlock the higher rewards from any package, there may be a few requirements:-

• Tesla bigger than Apple and ARAMCO combined.
• 1 Million profitable working Optimus Robots.
• 1 Million profitable working FSD Robotaxis
• 20 Million vehicles produced annually,
• Inhouse battery cell production of 1 TWh per year
• Dojo as a service.

If both sides get everything that they want I am happy, but in order to be rewarded, Elon needs to deliver.

Elon has some idea of what is coming, I think that is why he is negotiating now.,

Elon's 2021/2022 sales reduced his projected ownership stake 3.2% (of the company)

Ownership as reported to SEC is share plus option count irrespective of ability to turns those into shares at 1:1. With 50% tax, only half are realizable

Ownership ending 2018: 21.7%, post exercise 21.0%
507,370,200 shares 71,221,650 options (adjusted)
These options are from the 2012 plan, not the 2018

Ownership 2019: 20.8% post exercise: 20.1%
511,283,400 shares 68,596,650 (non-2018)

Ownership 2020: 22.4% post exercise: 20.7%
511,478,955 shares 169,916,850 options (some 2018)

Ownership 2021: 21.2% post exercise: 19.6%
517,824,753 shares 177,320,865 options (only 2018s)

Ownership end 2022: 20.6% post exercise 18.8%
411,051,576 shares 303,971,130 options

Backing out all sales, post exercise he would be at 22.0% (26.9% SEC version)
545,581,725 shares and 303,971,130 options

Don't like the optics of this as well but when it is all said and done what shareholder is going to argue against 5-10% dilution for another 7-8x stock price increase. Set the bar super high and let him do it. We all know he will achieve it. Little risk to the shareholders if we agree as he won't get the shares unless he achieves. Bigger risk if we don't give it to him as now it's obvious he will do it outside Tesla.

I’m also ok with giving Elon a couple of percent and Elon doing the hard work while I’m surfing the web.

More like 14 to 15 percent...



Different numbers
13% (ish): Shares he currently has (current voting)
20.6%: Shares + options he has (SEC reporting, meaningless)
18.8% : Shares + options - (exercise and taxes) (max voting after exercise)

If you want a better world for the spawn of your loin, a number of people besides Elon need to step up to the plate.

If Elon can’t start these companies and put them into self-sufficiency where other people simply need to not eff it up, then bring on the zombies.

Elon gathers the wood, starts the fire, stokes it until it’s a bonfire. All the other people have to do is keep throwing wood on.

This thought process that he has to stay in a full on CEO role to keep a company running efficiently and properly is why the human race is doomed. Elon literally just showed the whole world how to build a car company, a space company, an energy company, etc…. Nobody else on the planet can take up the reins and carry on!?

If you really believe what you posted, there is no hope because there isn’t a single other person on the planet turning the impossible into reality at a scale and pace that’s required to turn our destructive course around. Everyone else is intently focused on tearing him down, sabotaging mankind, making money off his back, telling and spreading lies, and being judgy.

This tweet is telling us that the board already approved his compensation package pending lawsuit, and he's just sharing with us why they approved him for 25% ownership.

Nope he said in follow up tweet that no discussion has taken place with board about a comp plan until case is decided,

Analyzing the situation it seems pretty clear what is happening. To keep it simple there's two situations.

1. Elon loses the shareholder lawsuit and doesn't get a new incentive package. Then all his work after 2018 will not be compensated, he will only have 13 percent of the shares, so it's really a loss of around 600 million options (300 million from 2018 and 300 from a hypothetical new incentive package)

2. Elon does not lose the lawsuit and a new incentive package comes modeled after the old one. His stake is 400 million shares he owns today + 600 million in stock options. He will have to sell 200-300 million shares for taxes, and exercise the rest of the options for stock. That's the ~25 percent Elon is demanding.

So the 25 percent is not really a number Elon randomly chose, but that's the amount that a new stock incentive plan and not taking his 2018 plan would end up at.

I think personally as a shareholder we are almost all fine with giving another incentive plan to him, but the way he's dragging us across the mud by threatening to stunt Tesla's growth in AI/robo is not something he should be doing, especially with what long-term shareholders did to support him over the years.

FWIW another way they could increase Elons % of voting shares controlled would be to do a large share buyback and retire a large # of shares.

 

[MC3OZ]

Possible alternative:

Spin-off Optimus company:
Elon owns 30%
Tesla own 50%
IPO remaining 20%

Not great for existing shareholders

I would try the following, spin off a separate Tesla-AI company containing Optimus and Dojo, but not FSD.
As a new company is being set up, a different share class with higher voting rights can be created?

All Tesla shareholders get one share in the new Tesla-AI company, for each Tesla share that they own.
I would hope that the value of a Tesla-AI share at least matches the decline in value of Tesla shares.

Elon has 2 separate comp packages:-

1. Tesla - Rewards for agreed milestones earns - Tesla shares/cash.
2. Tesla-AI - Rewards for a different set of targets earns - the special class of shares with higher voting rights.

I know nothing about US law, but I hope this kind of arrangement would be legal.

 

[Buckminster]

I would try the following, spin off a separate Tesla-AI company containing Optimus and Dojo, but not FSD.
As a new company is being set up, a different share class with higher voting rights can be created?

All Tesla shareholders get one share in the new Tesla-AI company, for each Tesla share that they own.
I would hope that the value of a Tesla-AI share at least matches the decline in value of Tesla shares.

Elon has 2 separate comp packages:-

1. Tesla - Rewards for agreed milestones earns - Tesla shares/cash.
2. Tesla-AI - Rewards for a different set of targets earns - the special class of shares with higher voting rights.

I know nothing about US law, but I hope this kind of arrangement would be legal.

It would be worth it to see what wall st have to value the new company at.

 

[Artful Dodger]

I would try the following spin off a separate Tesla-AI company containing Optimus and Dojo, but not FSD.

It makes no sense to move DOJO to a separate company from FSD. That's like taking the public school your children attend and selling it to the coal mines: Won't end well for the kids.

We, the shareholders, ALREADY PAID for Dojo, and it's upside potential. I don't even think Elon is talking about that, more likely future AGI. As for the Teslabot, that's ours too. And Elon's at his current ownership of TSLA.

For example, Elon wanted to build the Model Y on it's own own platform, but the BoD convinced him to bring it to market sooner by sharing the Model 3 platform. Elon needed advice.

Another example is FSD/Robotaxi, he wanted to build Robotaxi first, but the other leadership convinced him they could build both Model 2 and Robotaxi on the same line (now under construction at Austin). Elon needs the people around him to keep his feet on the ground.

What this comes down to is control of the future of AGI/Robotics. Elon can't assure that with 25% either, and frankly he's made some bad calls in the past which the Board has often corrected. That's proper, and expected of the Board. I don't see him needing more influence.

So, in conclusion, no more dilution, and please, do tell us how he's going to sell ~ %5 of pre-2018 shares w/o tanking the SP. The rest is a distraction, and giving him 10% more stock options just exasperates the underlying flaw both in the 2012/2018 CEO comp. plans: how to exercise the stock options w/o selling into the market and crashing the SP.

 

[Christine69420]

Why not give Elon cash? As in a salary.

Which he then can use to buy TSLA each time his paycheck clears?

You know - monthly averaging into TSLA the way many of us do/did?

Could be linked to a % of the net profit of the new business areas such as Robotaxi, Dojo, Optimus etc. Should be a nice incentive for him to grow those parts of the company.

 

[MC3OZ]

So, in conclusion, no more dilution, and please, do tell us how he's going to sell ~ %5 of pre-2018 shares w/o tanking the SP. The rest is a distraction, and giving him 10% more stock options just exasperates the underlying flaw both in the 2012/2018 CEO comp. plans: how to exercise the stock options w/o selling into the market and crashing the SP.

Good point, but that is why I had cash as part of the Tesla compensation process.

The rest of the approach is an attempt to give Elon what he seems to want, without needing to top him up to 25% of Tesla shares.

If you own Dojo as an Tesla shareholder you would also own it as a Tesla-AI shareholder, yes you paid for it, but you still own it.

The boundary is that FSD has been trained without Dojo in the past, and Dojo isn't essential for training FSD.

IMO we should be aiming to keep Elon happy and motivated for another 5 years, because there is still a lot of upside, and there might be a lot of downside in him leaving.. We are looking for a win/win here, so both parties need to be happy...

I imagine any complex proposal, would be subject to a vote, and might not be approved.

Sometimes the best option is the "least bad" option, and you need to consider how all options could play out...

Sometimes subdivision results in the sum of the parts being valued at more than the whole, or it creates extra flexibility..