Elon Musk has as soon as once more captured media consideration. This time, nevertheless, it isn’t a rogue X rant or embittered feedback about President Trump’s abuse of govt authority. As a substitute, a proposed $1 trillion pay bundle crafted by Tesla’s board and Musk has grabbed headlines. The proposed scheme is ludicrous not solely by way of the extremely aspirational 12 milestones that may unlock the advantages, but in addition by way of good governance observe.
Greed could also be good however when is sufficient?
Even needing to assist 14 kids with 4 completely different moms, how a lot capital does Musk want? The argument that Musk wants extra incentive to steer Tesla to new heights runs fully counter to the truth that he owns practically 20% of the corporate’s excellent shares and can already be nicely rewarded from any upside within the firm’s efficiency. If Tesla have been to attain an $8.5 trillion market cap, as outlined by one of many pay bundle milestones, Musk can be value over $1.6 trillion, primarily based on that present possession stake.
Musk is the richest particular person on this planet (or second should you imagine that primary is Vladimir Putin), and practically twice as rich because the people ranked third and fourth, Larry Ellison and Mark Zuckerberg, respectively. Estimated to be value over $437 billion, none of Musk’s way of life, sources, or affect will meaningfully change from any materials enhance in wealth.
After threatening to stroll away from Tesla earlier this 12 months, Musk acquired a $30 billion pay bundle after a federal choose denied him a $50 billion bundle. It’s shameful for Musk to now be holding shareholders hostage to go well with his want for energy. Famend founders resembling Bernie Marcus of Residence Depot, Invoice Gates of Microsoft, Michael Dell of Dell Applied sciences, Steve Schwarzman of Blackstone, Sam Walton of Walmart, and Larry Fink of BlackRock by no means fabricated shakedown methods like this to regain extra management of their corporations after they went public.
Furthermore, ought to Musk act on his menace and go away Tesla, he can be the largest loser as the biggest shareholder of the largest meme inventory in monetary market historical past. Tesla has a P/E ratio of over 200x, in comparison with the world’s most useful firm, Nvidia, at practically 50x, so a 50% drop within the current Tesla market cap of $1.1 trillion would lead to a $110 billion loss in paper wealth, 1 / 4 of Musk’s estimated value.
The advantageous line between visionary winners and delusional losers
The efficiency milestones within the proposed pay bundle are each illusional and delusional. In accordance with the proposal, Tesla is required to ship 20 million automobiles, a big enhance from the 1.8 million delivered in 2024. The corporate should additionally distribute a million robots. They haven’t even developed a completely practical humanoid robotic.
Extra benchmarks require a million robotaxis to be positioned into industrial operation, versus 30 on the roads at the moment, and 10 million subscribers for its Full Self Driving service, in comparison with roughly 1 million in 2024.
Most jarring are the mandates for the corporate to greater than double the $4 trillion market cap of Nvidia and to notch $400 billion of adjusted EBITDA, versus $16.65 billion in 2024.
Battery drained in Musk’s magic wand a shareholder concern — not authorities
Regardless of the absurdity of the efficiency bundle, the federal authorities doesn’t must intervene, because it has been so inclined to do these days. If stockholders don’t just like the proposed pay bundle, then they’ll vote in opposition to the proposal or promote their inventory holdings. After all, shareholders, not the federal government, ought to be asking necessary questions—of which there are various—in regards to the necessity for such a wealthy payout and excessive possession stake.
A kind of burning questions: If Musk most well-liked sustaining a lot management, then why did he take Tesla public?
The centrality of the chief govt to the success of the corporate is much extra symbolic within the eyes of tech bros than it’s substantive within the eyes of the typical buyer. In reality, as of late, he has been essentially the most detrimental issue to the Tesla gross sales pipeline, which is on monitor to fall for the second 12 months in a row. Gross sales in Europe have notably fallen by 40% year-over-year, ceding its dominant market place to Chinese language EV automaker BYD for the primary time. The Chinese language market has been simply as difficult for Tesla, which has skilled repeated gross sales declines over a number of months this 12 months and has yielded greater than half its market share to rivals since 2021.
Many Tesla fans can be shocked to know that Musk didn’t create Tesla, however he squeezed out its first CEO, co-founder Martin Eberhard, together with Tesla’s different co-founder Marc Tarpenning. They have been those who named the corporate for the good, penniless inventor of alternating currents, wi-fi distant controls, and X-rays in 2003. The plunging gross sales of Telsa have been instantly linked to a world client backlash after Musk’s endorsement of the German AFD occasion — thought of a Nazi apologist group — and a U.S. client backlash in opposition to his DOGE initiative, a twister of merciless, harmful, self-interested destruction of significant federal businesses, in partisan service to President Trump.
Whereas Musk stands out as the biggest inventor of our time, his magic wand is overhyped. Most of his non-public corporations, resembling Neuralink, The Boring Firm, X/Twitter, and SolarCity, have been a bust or seen lackluster efficiency. Photo voltaic Metropolis was a failure that obtained jammed down the throats of unrelated Tesla shareholders. It could take a number of nerve to rejoice the delayed success of Neuralink. X/Twitter’s worth collapsed after Musk took management.
Not less than there’s fact in promoting for the Boring Firm. It lives as much as its identify by failing to attach the scores of cities with excessive pace tunnels that have been promised years in the past. SpaceX has seen success primarily attributable to a secure circulate of presidency contracts and subsidies, and the regular working hand of President and Chief Working Officer Gwynne Shotwell. xAI has potential however its Grok chatbot raised many issues when it started spewing pro-Nazi/Hitler and antisemitic pronouncements quickly after Musk tampered with the big language mannequin’s algorithm.
Main on the sting whereas taking the board off the cliff
The board is affected by what political scientists and psychologists name “groupthink,” psychiatrists label folie à deux, social employees name “codependence,” and regular folks acknowledge as an infatuation with a charismatic, cultish highly effective determine. Now we have seen this occur earlier than at Viacom with Sumner Redstone and CBS with Invoice Paley.
We’ve seen it with Ken Olsen at Digital Tools Company, as soon as the world’s second-largest tech firm however now not in enterprise. And we noticed it with Juan Trippe at Pan American World Airways, the now-defunct pioneer of transoceanic journey that was as soon as America’s flagship service. The unique nationwide espresso home pioneer, William Black, ran the Chock full O’Nuts chain that he based into his mid-80s when he was flat on his again within the hospital whereas his full-time doctor and lifelong pal served because the president. These boards adopted such charismatic CEOs, who lived on the sting, till they ran proper off the cliff.
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