
Tesla's $2.6B Musk Award Too Costly, Glass Lewis Says - kuusisto
https://www.bloomberg.com/news/articles/2018-03-05/tesla-s-2-6-billion-award-to-musk-too-costly-glass-lewis-says
======
feniv
The article doesn't go into much details of the stock award. Musk is proposing
not taking a salary for the next 10 years and receiving a 1% stock award each
time he meets some insanely aggressive milestones:
[https://cdn.teslarati.com/wp-
content/uploads/2018/01/Tesla-C...](https://cdn.teslarati.com/wp-
content/uploads/2018/01/Tesla-CEO-Elon-Musk-Performance-
Award-e1516720893456.jpg)

[http://ir.tesla.com/releasedetail.cfm?releaseid=1054948](http://ir.tesla.com/releasedetail.cfm?releaseid=1054948)

I'm not a TSLA shareholder, but tying CEO performance to company performance
rather than an indifferently high salary seems reasonable to me.

~~~
freddie_mercury
Musk already owns tons of Tesla story and should be motivated by that. There's
absolutely no evidence that additional equity would motivate him more. On the
contrary, there is plenty of evidence on the diminishing marginal utility of
wealth.

Like much CEO pay, Musk's pay package is more about status than about
motivating him.

Or is someone really going to try to make the case that he's kinda half-assing
it right now?

~~~
ericb
He's not half-assing it, but he has Mars goals which are likely to distract
him at some point. He is serious about his Mars efforts. At a certain point it
makes sense for him to leave to focus on that, unless staying at Tesla also
helps him hit his Mars goal by 10xing the resources he can dedicate to the
effort.

~~~
kilroy123
He said he wants all this money just so he can fund colonizing Mars.

So I'm guessing he'd take that money and just privately fund SpaceX, like Jeff
Bozos is doing with blue origin.

~~~
JumpCrisscross
> _I 'm guessing he'd take that money and just privately fund SpaceX_

If his goal is to colonize Mars and you want him to sell cars, a good way to
do that is to say "sell cars for 10 years and we'll give you enough capital to
do in the following 10 what you couldn't do in 20 from today."

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aphextron
According to the article the board feels this is necessary to ensure Elon's
focus is with resolving Tesla production issues, and not his other projects
(SpaceX). He tries to create this superhuman "ironman" persona in the media,
but the reality is no single person can possibly run all of these companies
effectively, and investors are calling him out on that.

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V2hLe0ThslzRaV2
Appears Glass Lewis & Co currently maintains approximately 37% of the market
share for proxy advisory services - but does that mean that all of their
clients vote as per Glass Lewis reports recommend? If so, given they
collectively advise $20 trillion worth of assets, would someone please explain
why this is not toxic to a free market.

SOURCE:
[https://en.wikipedia.org/wiki/Glass_Lewis](https://en.wikipedia.org/wiki/Glass_Lewis)

~~~
JumpCrisscross
> _given they collectively advise $20 trillion worth of assets, would someone
> please explain why this is not toxic to a free market_

They're recommendations. Reading board proposals and working out the
consequences of CEO pay packages is (a) hard and (b) not particularly
rewarding. Instead of every investment firm having someone doing hard and non-
rewarding work, they outsource it to these proxy advisory firms.

Keep in mind who these advisory firms' customers are: the investors. It could
be impolite for XYZ shareholder to publicly vote against Elon Musk. It is
easier to call one's proxy advisory firm and let them know your thoughts. (It
would also be more effective, from a political perspective, at achieving her
goal.)

(Nitpick: they advise _in respect of_ $20 trillion of assets. They don't make
buy/sell decisions.)

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joncrane
Isn't this setting up a bizarre incentive where every time each of the
entities feels it isn't getting it's fair share of Elon's attention, that they
have to bribe him with some massive stock grant?

~~~
lopmotr
Why not? Eventually they would end up paying him just a bit less than the
value he provides, which is what you'd expect from any fair employment
agreement. At some point it would be cheaper to let him go or let him not try
very hard.

------
AndrewKemendo
These are the same people projecting that Apple should have sold 80M iPhone
X's...and then apple "fell short" of estimates when they sold 77M [1].

Why do people listen to these proxy advisory services like Glass Lewis [2]?
Honestly, none of them have anything near a good track record or are worth
anything [3]. They are effectively like tabloids for the financial markets.

Honestly, I'd love to hear from someone on wall street what value these
"analysts" provide?

[1] [https://www.recode.net/2018/2/1/16961202/apple-iphone-x-
chin...](https://www.recode.net/2018/2/1/16961202/apple-iphone-x-china-
airpods-christmas-q1-2018-earnings-charts-analysis)

[2]
[https://en.wikipedia.org/wiki/Glass_Lewis](https://en.wikipedia.org/wiki/Glass_Lewis)

[3] [https://www.economist.com/news/finance-and-
economics/2159435...](https://www.economist.com/news/finance-and-
economics/21594358-bear-market-or-bull-analysts-give-bad-advice-consistently-
wrong)

~~~
dahdum
They explain their reasoning and do the boring legwork, even if you don’t
agree with their conclusion you can still find value in their analysis.

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kristianp
Requires registration to read.

~~~
kencausey
Or something like uBlock Origin set to block everything.

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kevin_thibedeau
Wasn't Tesla having revenue problems not too long ago? Seems like someone is
looking to flee a leaky ship by opening up some new ones.

------
tbabb
They should probably be spending that money on building cars.

I doubt that "more money" would make much of a dent on what Elon's motivations
really are.

~~~
JumpCrisscross
> _They should probably be spending that money on building cars_

It's a performance-triggered stock award in lieu of cash salary.

~~~
tbabb
They should still be spending that on cars.

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frgtpsswrdlame
There should be some sort of law that prevents this. Musk's companies have
taken over 5 billion in government subsidies, why are my tax dollars going
towards the creation of billionaires?

~~~
John_KZ
The subsidies do have a reason to exist, but I agree that they're misdirected.
They could directly fund R&D of battery/EV/aerospace technology instead of
subsidizing luxury vehicles that only serve as a novelty for the rich.

~~~
zaroth
The subsidies _are_ directly funding R&D of battery/EV/aerospace technology.
But this way, the rich people buying the cars are _also_ funding it, as well
as the investors buying equity. The tax incentives are working precisely as
they were designed, and for every dollar in subsidy there’s probably $9 more
in outside investment coming onboard.

~~~
frgtpsswrdlame
The subsidies are directly funding Musk's wallet as much or more than they are
funding battery research.

~~~
alakin
I get that you have strong feelings. But this is just uninformed. If you took
a sec to understand Musk's comp structure you'd see that its paper wealth, as
in he doesn't take cash out of the company. Instead he puts cash in the
company. Also he only sold stock to pay taxes. I'd guess its likely he paid
more in taxes than you, if you're an average earner.

~~~
zaroth
~$600 million in taxes actually.[1] But strangely nobody seems to subtract
that amount from the value of the electric vehicle credits...

Anyone who's been there and done this knows that what the IRS giveth with one
hand, the IRS taketh away with the other. The house _never_ loses, and there
is no house like the United States Government.

[1] - [https://www.bloomberg.com/news/articles/2017-04-21/tesla-
s-m...](https://www.bloomberg.com/news/articles/2017-04-21/tesla-s-musk-paid-
at-least-593-million-in-income-taxes-in-2016)

