Instead of giving Musk an option to buy TSLA at eg $100, give him an option to buy TSLA at the (SP500 Index/54) IF TSLA’s leverage ratio stays under XXX AND cumulative dividends paid out exceed 10X the value of options that Musk cashes in. For example. IOW make it a real incentive payout rather than billions of dollars of gambling chips. Hey, he could still borrow off of them.
Concede. Concede, partly or largely due to TSLA’s memestock value. Small handful of shares: a Delaware judge invalidated the pay package for carefully considered reasons. It left an explicit option for another vote. The owners of the company, many of them passive investors of the S&P 500 which automatically vote with management [1], voted to re-issue it.
I agree with hajario that this isn’t a heist and is too lawful to be considered a scam. But there are real issues with the US’s equity-based style of capitalism that are based on poorly considered logic and are laughably inefficient. On this message board we discussed possible reforms to executive stock options policy 10 or 20 years ago. Policy remains just as much of an inequitable joke as it was then.
Current shareholders and Musk have a shared interest in the meme stock bubble. Other stakeholders, as well as shareholders with a different take, would prefer that TSLA focus on its underlying business challenges.
[1] 16.5% of outstanding shares held by major indexers such as Vanguard, Blackrock, and State Street. Cite.
I’m like 85% sure I drove that car at some point in Cyberpunk 2077.
Leverage ratio is probably harder for retail investors to understand and isn’t something that can be directly read off their balance sheet (though it’s easy to calculate). Anyway, they have less debt today than in 2018 and their income is way up (plus their net cash position is positive). So that’s healthy, for whatever it’s worth. They don’t pay dividends so that’s irrelevant. Used to be that tech companies never paid dividends, though that seems to have changed (not sure why).
While we are agreeing, I totally agree with this.
I am a fairly new Tesla owner (car, not stock) and I love that car. I have never loved a car before. The FSD works great for me. My next car may not be a Tesla but it will definitely be an EV.
Maybe the shareholders love Elmo but the car owners are by and large embarrassed of him.
Even weirder–that thing at the very top has a little internal projector that shows graphics. So when it’s waiting for a pedestrian to cross, it shows a little animation of a pedestrian walking, presumably to indicate to other drivers that no, it isn’t stuck, it’s just waiting for something to happen. It makes it look even more like some of the more unfortunate vehicles in the game.
Financial ratios are freely available at your brokerage - Reuters spits out decent reports. IMHO if you can’t grasp those basics, you have no business investing in individual stocks, because you have no good reason to believe that your take is superior to the market’s.
Besides, we’re discussing executive compensation. Retail investors don’t have to understand the package: that’s the job of the compensation committee of the board of directors. Who should have the equivalent at least of a BA in business or more. This isn’t rocket science.
Yeah and the total amount that stock is worth is finite amount (at the whim of the markets but a finite amount) but it’s finite and thats the money available to the company via their shares. The Tesla company has just agreed to take 55bn off that total that is no longer available to them to make factories or design trucks that don’t suck.
Sure they do. They voted for it. They need to understand the things they’re voting for. The court that took away the package argued, in effect, that the shareholders didn’t understand what they were voting for. Except that in this case it really was easy to understand.
That’s not exactly true but it’s close enough. But it demonstrates my point: stock that is never sold plays no part.
Suppose hypothetically that Musk was granted a trillion shares, but they don’t vest for 200 years and they expire at his death. Would that have even the slightest effect on the stock price? Aside from concerns about what the board is up to, no. The shares are basically hypothetical as they can never be sold in practice.
There is a real cost to stock option grants and it ought to be factored into stock price, but markets struggle to incorporate the cost effectively – it’s complicated because they are conditional transactions. This is why we’ve seen pressure to move to RSUs which show up on the balance sheet right away.
In this case you could argue that this single grant is significant enough, and well-known enough that the market will incorporate it – or already has.
But I’m not comfortable saying that stock options have no cost or no effect on the stock price just because they’re drawn from the stock option pool. They’re still a potential liability.
Oh sure, I don’t mean to imply that these things have zero effect in all situations.
My point is that there is a sort of spectrum of existence when it comes to shares. There are all the shares that have not been issued at all, but hypothetically could be if the board decided to. There are shares that cannot be sold because they haven’t vested yet (and may not even exist–it’s just that they were promised to someone at some point, so they’ll have to be manifested somehow). There are those that are unlikely to be sold for whatever reason. Etc. And then all the way up to shares that are constantly being bought and sold.
This particular grant is a large sum and all else being equal we’d expect an effect. However, we can also expect that the shares won’t actually be sold for a long time, which gives them less of a “reality”. Further, it was a kind of vote of approval for Musk himself, which undoubtedly had more of an effect since most of Tesla’s value is predicated on future developments.
Instead they sold over 1.8 million vehicles last year including the highest selling model in the entire US including ICE cars. They’re doing something right. Their truck doesn’t suck. You just don’t like it. It’s selling well. Your silly hard on for Tesla is noted.
You’re really invested for someone who doesn’t own their stock or own one of their vehicles.
Except you have agreed to sell it at less than market rate
If a company agrees to sell stock it owns for less than market rate it’s taken away money it could spend on its business. That stock could have sold to fund a factory (or 5500 actually talented individuals who would be happy to come on board for a million worth of discounted stock options). That is detracting from the worth of the company just as much as if it handed over a bag of cash
[quote=“hajario, post:133, topic:1002838”]
Instead they sold over 1.8 million vehicles last year [/quote]
So my company sold 18000 widgets last year (we’ve sold 50000 in the history of the company) we make 5 dollars profit in each widget sold. Everyone agrees we have some tough years coming up (as reflected by the share price), partially due to my management screwups but also, lots of other widget makers are coming on the market.
I just paid myself half a million dollars!! Oh and coincidentally everyone knows I have 400 grand gambling debts as I got wasted and bet my heavily on Man United winning the treble this year.
That’s not me being fairly remunerated for the work I’ve done for the company, that’s a scam.
That’s why this matters, this isn’t some random liquor store manager with his hand in the till stealing 100 bucks. It’s the CEO of the company selling last year’s highest selling model stealing 55 billion, that is no longer available for the company to spend
I decided to take an objective look at how it’s doing. I’ve seen the videos showing the drawbacks, laughed with other Dopers over how stupid it looks, and so on.
Objectively speaking, among electric pickup trucks it is middle of the pack. It’s not considered the best or the worst. I’m reading reviews from MotorTrend, Car and Driver, The Drive, and Top Gear, and generally the consensus I get is that it’s okay. It has some strong points and some really weak points. Funny enough, Consumer Reports doesn’t have a rating because they haven’t done testing with it (I wonder if they weren’t able to get ahold of one). The most consistent praise I see for it is that it’s more “nimble” than you would expect (that’s a comment from multiple reviews).
Looking at it from a sales perspective, it wasn’t doing so great but has been steadily improving until the point where it’s beating a lot of competitors. I’m not sure if that’s a reflection of the demand increasing, or they are finally producing enough to meet the demand. Here is a graphic:
So from an objective perspective… Despite my personal feelings, I think it’s accurate to say it doesn’t suck.
They reached 1000/wk production in April, and on yesterday’s investor day they said they’re up to 1300/wk. No one has produced pictures of thousands of Cybertrucks piling up, so demand seems to be keeping up with production. Most likely they’re already beating F-150 Lightning sales.
Next quarter they’re also starting non-“Foundation” trucks. Every one they’ve sold so far has a $20k options package that you can’t yet opt out of. Well, obviously not everyone can justify that, even on an $80k vehicle. So that’s likely to help with sales as well.
The drive-by-wire system means it’s only 180 degrees from center to locked in one direction. But it’s variable-rate so it isn’t over-sensitive at high speed.
It you put down $250 today, a Cybertruck may be available in 2025, so it’s definitely a case of demand exceeding supply right now.
On the other hand, my local Ford dealer has 6 2023 F-150 lightnings available right now.
I personally think CTs are ridiculous, but other people feel differently it seems.
But are they going to sell millions of Cybertrucks in the next few years because Elon Musk stayed at Tesla? Absolutely definitely not!
Yeah there is a (very slim) chance that despite all the evidence to the contrary the Cybertruck is the future of American automation. Will that chance go to zero (or reduce significantly) if Musk leaves? Also no!
This is a not a 55 billion dollar bet on Cybertruck it’s actually 55 billion dollars Tesla no longer has to spend on making Cybertruck a success
This is just my general impression, but I think a large number of retail investors just see it as a matter of fairness. The package was approved in 2018. Musk met the very aggressive targets. Then a Delaware court took it away. The new vote restores it.
If it were someone other than Musk and we were talking, say, $55 thousand vs. $55 billion, I don’t think anyone here would be confused. And of course that’s no small matter; no doubt that it’s an absurd amount of money. But a deal is a deal.
A different perspective is that denying the compensation is a win-win for the shareholder. We already got the massive gains out of Musk, and now we don’t even have to pay him! Why would anyone want to do otherwise? That’s rational and probably the perspective of some of the institutions. I don’t think the retail investors are doing the same cold calculus, though.