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PaperclipPerfector  4mo ago (text post)   29896 thread views

Culture War Roundup for the week of October 6, 2025

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For a different extreme, look at Tesla. 125,000 employees right now. Market cap 1.3 trillion. Elon Musk right now earns about 8$ billion a year under current conditions, but it goes up by 1% of Teslas total market cap for each additional trillion in their market cap. If he hits just the easiest goals, he gets $36 billion a year. If it goes up to 8 trillion, he clears an eye watering $878 billion in 10 years, almost $90 billion a year. (yes that's in stock, not cash, if that makes a difference)

Musk's CEO pay at Tesla is uniquely generous even compared to other overly-generous CEO pay packages - to the point where the Delaware courts ruled it illegal. Tesla has the most liquid options of any single stock so it is quite easy to measure the ex ante value of Tesla share options. The pay package Musk "agreed" with Tesla in 2018 that was rescinded after it turned out to be worth $56 billion ex post was worth $2 billion ex ante back in 2018 - at a time when Tesla was only a $50 billion market cap. The number of public-company CEOs who made $2 billion from CEO compensation ex post is small enough to count them on your fingers. But even as the highest-paid CEO ever (by an order of magnitude) Musk made more as an owner than he did as CEO.

But the typical fat-cat non-owner CEO retires with a net worth in the high double-figure millions. Overpaid non-owner CEOs get a grossly disproportionate amount of public attention relative to how relevant they are to rising inequality, or falling living standards for line workers. I was particularly amused by the press coverage of Andy Jassy's $40 million payday as CEO of Amazon - none of which made the comparison to how much Jeff Bezos made off Jassy's work (about $80 billion, so 2000 times as much).

Would you agree that, even if in general CEO pay is not a major expense on their companies, there are particular cases where it could be, and Musk at Tesla is one of those examples? And it's interesting that he wa able to get it past the board and all sorts of normal shareholder protections, to the point where it required a court ruling to stop it. It's not some perfect elegant self-maintaining system.

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