| Let's go through the events here... Tesla was close to bankruptcy where it needed to massively ramp up Model 3 production (and prove that there was demand for electric cars) in order to succeed. Tesla was the most shorted stock on the market and almost every hedge fund manager thought it was going bust. Musk takes a pay package where he gets no salary or compensation if Tesla stock doesn't increase. For every $50 billion dollar increment in Tesla's valuation (Tesla was worth $60 billion at the time), Musk would get 1% of Tesla's outstanding shares at the time. Basically everyone calls the pay package ludicrous and laughs at how ridiculous the deal is (no one thinks Musk will make any money). Tesla manages to scale up Model 3 production and prove there is demand for electric cars. Tesla proceeds to 10x (something very few people expected) and Tesla shareholders are massively rewarded. Every tesla shareholder is thrilled. Musk makes $56 billion dollars but Tesla's valuation increases by $550 billion. A tesla shareholder with 10 shares sues and says Musk's pay package was too large. An activist judge agrees and now the lawyers want to walk away with $6 billion dollars. Yeah.... summarizes the state of the US pretty well. Punish risk takers & boldness. Award the lawyers. |
But if what you say is actually true - 1% for each $50 billion dollar increment in valuation + no salary and no compensation if stock doesn't increase - than this changes the whole thing. It's like no brainer decision for the founders and other stakeholders to allow Elon running this thing.