Latest / Elon Musk Podcast / Tesla’s $1 Trillion Question

Transcript

Tesla’s $1 Trillion Question · Elon Musk Podcast

• 0:00
  Tesla has set a November 6th shareholder vote in Austin that
• 0:04
  will decide whether Elon Musk receives a performance award
• 0:08
  worth up to $1 trillion USD. Now, the board ties the award to
• 0:14
  aggressive operating and market milestones that would reshape
• 0:17
  Tesla scale and governance. And the package would arrive
• 0:21
  after a year where leadership questions met fierce debates
• 0:26
  about pay and control. What outcome does this vote
• 0:29
  create for Tesla strategy and for Musk's role across his new
• 0:33
  companies? Tesla's chair, Robin Denholm,
• 0:38
  tells investors that Musk could walk if the plan fails.
• 0:42
  The warning lands as the voting window closes at 11:59 PM.
• 0:47
  Eastern on November 5th, hours before the annual meeting at
• 0:50
  Giga Texas. Now the message frames the vote
• 0:54
  as a retention test that links Musk's time and attention to
• 0:59
  shareholder approval. Now Tesla structure is the award
• 1:03
  as 12 tranches of stock options that vest only if Tesla hit
• 1:07
  specific targets. And the targets include lifting
• 1:10
  market value to about $8.5 trillion and achieving major
• 1:14
  progress in autonomy and robotics.
• 1:16
  And the board positions the plan as pay for performance with no
• 1:20
  salary or cash bonuses. Now, the board asks investors to
• 1:24
  view this plan in light of earlier litigation.
• 1:27
  And Delaware Corps previously voided Musk's 2018 option grant,
• 1:31
  which Tesla has fought as it built a new path to retention
• 1:34
  and control. You know, the company rallies
• 1:38
  support while proxy advisor scrutinized structure and
• 1:42
  governance. Now Calper CalPERS breaks ranks
• 1:46
  with Tesla's pitch and says it will vote against the plan.
• 1:51
  The fund holds roughly 5 million Tesla shares and argues that the
• 1:55
  award is too large and that it concentrates power in one
• 1:59
  person. Elon Musk and 1 shareholder.
• 2:01
  And the stance arrives one week before the meeting and gives
• 2:04
  cover to other institutions that question the packages.
• 2:08
  Now, ISS advises investors to oppose the plan and site size
• 2:13
  structure and commitment concerns.
• 2:14
  Advisor points to the 423,000,000 share scale and the
• 2:18
  performance goals that could still yield large payouts before
• 2:22
  full targets are met. The guidance also challenges
• 2:26
  board independence as it evaluates directors tied to the
• 2:30
  plan. Now I want to know your ideas on
• 2:33
  this. There's one camp that says this
• 2:36
  guy's going to be a trillionaire.
• 2:38
  How could you give that much power to one person, that much
• 2:42
  money to one person? And also they want to take the
• 2:48
  power away from a singular person, right?
• 2:51
  So that's one side of the story. And if they do allow Elon to
• 2:59
  keep his control and to keep doing what he does at Tesla, is
• 3:04
  that giving him too much power now?
• 3:06
  Of course, Elon is the center point of Tesla.
• 3:10
  Without Elon, Tesla would not be where it is today.
• 3:13
  Without Elon, all of these shareholders wouldn't be making
• 3:17
  as much money as they do. But also, we have to remember
• 3:20
  what happened when Elon went all political.
• 3:24
  They lost shares. They lost sales people in their
• 3:30
  regular demographics of the coastal cities in California.
• 3:36
  They turned down Tesla and went to other vehicle manufacturers.
• 3:41
  Now, if you are Elon Musk and you are threatening to leave the
• 3:47
  company because you don't think that what you have now is worth
• 3:55
  it, and these are his words. Not not exactly, but he's
• 3:58
  basically saying like, look, I might leave the company if I
• 4:02
  don't get what I want. If I don't get this pay package,
• 4:05
  I don't think it's worth me working there anymore.
• 4:09
  Now, everybody should understand their value.
• 4:13
  Personal side note, for the longest time, I didn't know my
• 4:16
  value when I started in the business that I started in, I
• 4:18
  was a coder. I was highly sought after.
• 4:21
  I was charging people $300 to make them a website back when
• 4:25
  websites were just becoming websites, you know, like back in
• 4:28
  the day. And if I would have reached out
• 4:32
  to the right people, same websites, I could have gotten 10
• 4:37
  times that. I could have gotten 4005
• 4:40
  thousand, 6010 thousand dollars for some of the sites that I was
• 4:43
  building. Eventually I learned that value,
• 4:46
  but also people should know their value.
• 4:48
  And is Elon Musk worth a trillion dollars?
• 4:51
  Is Elon Musk worth all of this power?
• 4:55
  And that's up to him to decide, but that's up to him internally
• 5:00
  to decide for himself. But since he is the head of a
• 5:04
  company that has shares, it's up to the shareholders to decide if
• 5:09
  he's actually worth it. Now let's talk about the other
• 5:14
  side. The other side is that these
• 5:17
  people believe in Elon Musk's vision.
• 5:20
  They understand where he's coming from.
• 5:22
  They know what he's done and what he's capable of.
• 5:25
  They know how hard he works. They know his vision.
• 5:28
  They know that he's going to try to make a ton of his vehicles as
• 5:31
  soon as possible, which will open up a huge revenue stream,
• 5:34
  which will skyrocket their shares.
• 5:38
  They'll make a bunch more money. And those are the people they
• 5:43
  really want Elon to succeed. They want to keep him in there,
• 5:47
  and they want him to not walk away.
• 5:50
  But if you're Elon Musk and you say you're going to walk away if
• 5:55
  you don't get this pay package, what about all those decades of
• 6:02
  work you put into this, all that work you put into Tesla, all
• 6:06
  that work that was put into all the amazing vehicles, all the
• 6:12
  amazing technology? I don't know.
• 6:14
  I'm torn on this one personally, because I think what Elon has
• 6:20
  done with Tesla is absolutely amazing.
• 6:23
  I also think that anybody can make their own decisions as far
• 6:31
  as what they're worth. If he does leave Tesla, this
• 6:34
  company is going to tank. The stock is going to go down.
• 6:38
  And he knows that they had, he has all the shareholders, you
• 6:44
  know, or in the palm of his hand, because he knows, he
• 6:47
  understands that if he threatens to walk away because he doesn't
• 6:51
  get this pay package, he knows that all of their money would be
• 6:55
  wiped out. He has them by the wallet.
• 7:00
  And when he, or if he walks away from this, then they are going
• 7:06
  to tank. And of course, they're going to
• 7:08
  lose millions and millions of dollars, hundreds of millions of
• 7:11
  dollars, some of them. So he has them by the cojones.
• 7:17
  What do you do at that point if you're an investor?
• 7:20
  I want to know if you're an investor in Tesla and I do have,
• 7:22
  I want to give a little, I want to give a, some insight here.
• 7:27
  I do have a little Tesla stock, but I'm not going to vote yes
• 7:32
  for this personally. And this is not advice, by the
• 7:35
  way. I'm not going to vote for it.
• 7:40
  But I don't have a huge, you know, I don't have millions of
• 7:43
  dollars invested in Tesla, but I do have a voice.
• 7:50
  So I, I don't know, I'm torn. What do you think?
• 7:52
  If you're a Tesla investor, let me know if you have some, if you
• 7:54
  have some shares, let me know. If you don't have shares, let me
• 7:57
  know too. I want to know what you think in
• 7:58
  the comments and whatever podcast platform you're on right
• 8:01
  now. This is a weird one.
• 8:04
  Now the board has answered with a focus on retention and
• 8:09
  incentive. Now Den Home has talked about
• 8:14
  the risks of Tesla if they lose Musk or his role becomes
• 8:20
  uncertain. And then Home positions the
• 8:23
  award as a long term contract, which is tied to execution.
• 8:28
  So I don't know, it's, it's a tough one.
• 8:33
  And the mechanics of the vote add urgency to turn out in
• 8:36
  timing as well. Investors cast ballots up to
• 8:40
  late evening on November 5th, and the company convenes the
• 8:43
  meeting on November 6th at Giga Texas.
• 8:47
  So you only have a few hours to gauge late momentum before
• 8:50
  results land. And you know when Mega or Giga
• 8:55
  text this happens on November 6th.
• 8:57
  If they vote against it on November 5th, will Elon Musk
• 9:00
  even show up? Who knows.
• 9:05
  So the we're talking about ownership dynamics here.
• 9:09
  If Tesla hits every single milestone, Musk's state could
• 9:13
  rise into the mid 20s or higher, which would expand his voting
• 9:17
  power and reduce the risk of further dilution.
• 9:20
  That outcome would satisfy his Musk's stated push for a
• 9:24
  controlling position near or above 25%.
• 9:28
  He wants to control as much as possible of Tesla now.
• 9:33
  He's going to get paid for this. Of course, Tesla leans on a road
• 9:36
  map that depends on AI, autonomy, and robotics to
• 9:39
  justify a package scale to future value rather than current
• 9:42
  car sales. They know that the future is
• 9:44
  autonomy. They know that as robotics.
• 9:48
  Every major manufacturer for the last 30 years, Mitsubishi,
• 9:53
  Hyundai, Honda, they've all made robots as well as cars.
• 9:58
  And this is the game plan that Elon is doing.
• 10:01
  He's doing autonomous vehicles as well, but he's making robots
• 10:05
  just like the other car manufacturer have.
• 10:08
  Now this board is arguing the Musk's role is central to the
• 10:14
  execution timeline and to investor confidence through the
• 10:18
  next phase of Tesla. It's a trade coming up in
• 10:24
  November 6th. A yes vote locks an
• 10:27
  unprecedented stock grant to performance goals, strengthens
• 10:31
  Musk's stake, and sets a retention signal.
• 10:35
  A no vote invites leadership uncertainty.
• 10:38
  Who knows if he's going to leave, There's going to be
• 10:41
  critics from this. It tests the board's contingency
• 10:45
  plans. Like what happens if Elon asked
• 10:47
  actually does leave? Who do they put in his place?
• 10:50
  But we're hearing some rumors about that and I'm going to
• 10:54
  touch on that in the next few days about who could take over
• 10:59
  if Musk leaves. I don't think he's going to
• 11:02
  leave. I think people are going to keep
• 11:04
  him in. And that's just, you know, I, I
• 11:06
  don't think he's done anything so bad that people would vote
• 11:10
  him out. He has done some bad stuff.
• 11:12
  And the, the stock has been OK, but the sales have been down and
• 11:16
  the stock keeps rising because of autonomy, not because car
• 11:20
  sales. If they were only worried about
• 11:22
  car sales, they would be really in a pickle right now.
• 11:27
  Anyway, let me know what you think in the comments.
• 11:30
  I really do appreciate your time.
• 11:32
  Take care of yourselves and each other, and I'll see you in the
• 11:34
  next one. Hey, thank you so much for
• 11:39
  listening today. I really do appreciate your
• 11:42
  support. If you could take a second and
• 11:43
  hit this subscribe or the follow button on whatever podcast
• 11:46
  platform that you're listening on right now, I greatly
• 11:49
  appreciate it. It helps out the show
• 11:51
  tremendously and you'll never miss an episode.
• 11:54
  And each episode is about 10 minutes or less to get you
• 11:57
  caught up quickly. And please, if you want to
• 12:00
  support the show even more, go to patreon.com/stagezero and
• 12:06
  please take care of yourselves and each other and I'll see you
• 12:08
  tomorrow.