So if I get 12% of the profit from music sales that is not “compensation”? Share ownership is, at its foundation, a profit (and asset) sharing agreement.
You are getting confused by the fact that this class of profit sharing agreement can be easily sold for its expected net present value of all future cash flows and that they frequently retain earnings in tax advantaged forms instead of directly distributing their generated income in highly taxed forms.
1. Elon could quit and do zero work and he would still own the 12%. So what is his compensation for the extra work?
2. If you owned $10M worth of shares of TSLA from your personal investments, and applied to work at TSLA, would it be reasonable to deny you any compensation since you are already incentivized and share in the success?
This is not to comment on what the right pay package is; perhaps the proposed one is far far too rich, but that's a separate question to whether his existing assets are compensation or not.
Veserv|4 months ago
You are getting confused by the fact that this class of profit sharing agreement can be easily sold for its expected net present value of all future cash flows and that they frequently retain earnings in tax advantaged forms instead of directly distributing their generated income in highly taxed forms.
orionsbelt|4 months ago
2. If you owned $10M worth of shares of TSLA from your personal investments, and applied to work at TSLA, would it be reasonable to deny you any compensation since you are already incentivized and share in the success?
This is not to comment on what the right pay package is; perhaps the proposed one is far far too rich, but that's a separate question to whether his existing assets are compensation or not.