Judge makes American capitalism worse: thoughts on the Musk compensation package voiding

 

Click above to go to the bit about Elon Musk’s compensation package 

Musk haters: “$55 billion in compensation! That’s crazy!”

Me: what’s actually crazy (and harmful) is the judge voiding the compensation package. As the All In Podcast guys explain well. 

What the Musk haters don’t know about the package, discussed above by the smart guys at “All In Podcast”:

1. It’s an all or nothing deal. 100% based on performance, with zero paid if he did not meet extremely aggressive targets

2. The targets to be met, starting in 2018 up to 2023 are: (a) Share price up ten-fold and (b) aggressive revenue targets and (c) aggressive EBITDA targets.

3. The targets were set so aggressively that at the time people called the deal “crazy” and bad for Musk. 

4. That deal was approved by 73% of the shareholders of Tesla

5. Musk hit the targets: to the huge benefit of the shareholders, and to Musk himself. 

6. The payout is NOT simply a big wad of cash. It’s in Tesla shares, which only vest over five years. So, he has to wait for them to vest and can’t simply sell them immediately. 

7. By attacking the package, the judge is in effect encouraging more deals for CEO’s for guaranteed compensation, instead of compensation based on performance. The guys above explain all of this. 

In short, the voiding of his shareholder approved compensation package is “unfair and unAmerican”, as Chamath says.