Pyramid schemes are inherently a scam, because the last layer is always fucked when they’re told it’s a business opportunity.
Fundamentally it’s something that’s within that company - if the board and shareholders agree that they want to grant him that package, why shouldn’t they be allowed to do so? It’s ultimately none of my business, not being a Tesla stakeholder of any sort.
This sounds like the usual sour grapes about the wealthy that gets parroted on here and Reddit all the time.
The system has some deficiencies but the former is always a scam that robs people of their money while the latter in most cases does not and isn’t usually detrimental to society, it’s actually beneficial in many ways. And so far you have shown why this would be detrimental to society if the stockholders agree to it.
The judge ruled against the package not because of anything inherent about the way it was structured but because there was a legitimate argument that the Board of Directors was not sufficiently independent from Musk and arguably making a decision on his compensation package that was more about his interests rather than those of the shareholders. The vast scale of it was one consideration, of course, as it is unlikely he’d have made the same ruling if the package was a small fraction of it, but that just points to the fact that there was little legally problematic about the basic structure of it.
But if those shareholders have subsequently voted in approval of it, well, that’s on them.
It’s common for some people to get paid more than we think they deserve. We wouldn’t bat an eyelash over somebody being paid $0.25 more an hour than we think they deserve. If Musk had been given 1 million options rather than 300 million, hardly anybody would have noticed. So, it is quite apparent that it is the scale of the compensation that most rankles the OP.
Why?
So, again, why? They can sell any time and have certainly done quite well on the investment.
In 2018 the shareholders approved a pay package whereby he would get that particular bonus if the company met certain metrics. The metrics were undeniably met. A lawsuit happened which denied it to him. They shareholders held a new vote (Elmo’s shares weren’t allowed to be included) and they overwhelmingly approved it again.
The stock price in 2018 was around $25/share. It’s $184 today.
This was in no way a heist.
I think the point is that you can say this about a pyramid scheme as well. Even if a pyramid scheme is done completely openly, nobody is lying about how it works, nobody is committing fraud, it’s illegal because people decided they are harmful and shouldn’t be allowed, so now they’re illegal. And you can say that if you aren’t part of the pyramid scheme, if everyone participating in it agreed to it, it’s not your business. But that’s not the case, it’s illegal.
So I guess the question is whether or not there should be an open limit to a package you grant to someone. Me personally, I’d say I need to see the harm to society before saying there should be.
I suspect that the reason a pyramid scheme is illegal even when done openly is because by its very nature it is tricky and even when you explain it fully to a person, they still might not understand what they’re getting into, even if they think they do. It’s designed to trick people. It’s a weird case of open and transparent fraud. That’s why we don’t allow it. And as Tripolar says, it always ends up harming whoever is at the bottom of the pyramid. It’s predatory.
I’m not sure that what’s happening at Tesla (and other companies) is the same as that.
Yeah because that is what makes it objectively more aggregious. The Tesla company has in its entire history sold about 5 million cars, they make around 5000 bucks of profit on each car. So a demonstrably untalented blowhard is being paid twice as much as the company has ever made! (Conservatively, that 5000 is how much profit they make now, I’m sure they make much less when they first started selling cars)
So what?
How people choose to invest their money is their business. I’m not making or losing money based on their decisions.
If you want to start a thread based around the idea that market capitalism is a terrible system, go nuts. I might even agree on a few points. Or a thread on restrictions we should place on executive compensation, go nuts.
But that hardly a heist makes. I like treating adults as adults, i.e. people who have agency and should be allowed to make their own decisions about their own money. Claiming they need to be protected from themselves for gifting Musk a lot of money is patronizing and arrogant.
Elmo’s compensation package seems like a form of vulture capitalism to me, where the value of the company is extracted by its owners to the detriment of the company’s long-term viability. The owners can legally do so, but that doesn’t mean it’s a net positive to society.
Now that, I can agree with.
So this right here is what I’m saying…
Why do we have laws to protect the last layer of a pyramid scheme but not California teachers retirement fund?
The only bit of this i’d disagree with with is the “seems” 
What exactly needs protecting?
The California teachers retirement fund has (so far) made a profit on its investment in Tesla. Investing in stocks is inherently risky, and they have made an investment with full knowledge of the risks involved.
A pyramid scheme inherently involves somebody (a lot of somebody’s usually) not given full knowledge and left holding the bag eventually. They necessarily have to recruit more and more people to prop up the system before it inevitably comes crashing down for lack of new funds.
That’s not necessarily true for stock investments. Even if Musk is given 300 million options, their investments are still profitable unless the stock absolutely craters in the near future. There’s no necessity that there will be a crash and no necessity to recruit an ever increasing number of victims to maintain the stock price.
I would be comfortable with California passing a law that you can’t invest too much of a retirement fund into a single company. That would avoid the whole problem.
That is a succinct description, and the only thing exceptional about Tesla and Musk is just how nakedly egregious it is compared to other efforts to extract all value from a flailing company. But, again, I think it needs to be recognized that the market valuation of Tesla was (and still remains) so grossly inflated above any revenue it might receive in many decades of production that paying Musk a substantial fraction of that value in discounted stock options is basically paying him with Monopoly® money. I’m sure Musk’s plan is then to use these options to leverage more loans or do some kind of exchange before Tesla’s market valuation drops further, in essence making it a massive long-con pump & dump scheme, but one that is completely legal.
Stranger
There’s an interest for society to balance the risk vs reward of investors. Investors face some amount of risk for some amount of reward. That’s good.
What’s not good is privileged investors changing the balance of risk vs reward too far in their own favor against the interests of non-privileged investors. The law allows this to some extent, but maybe that extent needs to be adjusted.
They’ve made tens of millions of dollars at least and are free to sell all or part of it at any time. What’s the issue here?
If the shares are owned by the company, then they’re effectively co-owned by all of the other shareholders, in proportion to how much stock they own. So selling them at a discounted rate is decreasing the value of what each shareholder owns. It might not actually devalue the shares, but it has the same net effect.
You inherently can’t have a pyramid scheme without lying about how it works. If you told people “Hey, invest in this great opportunity that’s probably going to leave you in a lurch, just so I’ll get money!”, you wouldn’t get even the most gullible of suckers.
I don’t disagree with any of that. In fact, I rather agree that executive compensation in general has gotten out of whack.
But comparing this system to a pyramid scheme borders on delusional.
As is the idea that this will somehow result in CalSTRS immediately losing money and that they need special protection. If we want to protect teachers, bring back pensions or fund their retirements directly from the state budget or find another way to fund it. It’s a bizarre sidetrack for this thread, when they have made some money from their investment and are in no imminent danger of losing their money.
Yeah, I agree with all that. That Musk is burning down his companies at various speeds should not be (and likely isn’t) an immediate problem for anyone’s retirement.