2024-06-15 16:26:00 +07:00 by Mark Smith
On first read about Elon’s USD$50 billion pay package, it does seem utterly ridiculous. And in a way, the amount is so huge, that it kind of is ridiculous. But when I read about it, something made me instinctively side with Elon, I couldn't figure out why. A few days ago I remembered why.
Something similar happened to me a little over a decade ago. I was working for a US startup that was expanding it's presence into the EU. The first 3 years were incredibly difficult, but through huge effort, working crazy hours every week, flying in and out of countries all around the EU, Middle East and Africa, we grew our region's revenue from basically zero to 1/2 of the entire company’s revenue. We had sold, installed and customised our software into most of the biggest media companies across the continent. It was quite an accomplishment.
The entire time the variable compensation part of my pay package was pretty darn huge, but just out of reach. Nevertheless we continued, working and traveling almost all the hours that existed. The whole time, the others on the EU team would tell me these amazing stories of previous startups they had worked for where they hit their targets and got paid massive amounts of money in bonuses. The promise of big bonuses was a heck of a motivator.
Then in the third year, we really started to hit our stride. We started meeting the impossible targets. The bonuses started trickling in, things were on the up. It was awesome, especially after so much hard work. What hapenned next was quite a shock to me.
The US management sent me a new contract to sign. They didn't mention they had re-structured the variable compensation part of the package. I only discovered it when I read through the small print. It wasn't a few minor changes, it was for all intents abd purposes, a totally different pay package. I white boarded the two packages to compare them in detail, and it was night and day. Completely different, like by an order of magnitude. I brought this up with them and they said they had made a mistake, and the original package was way more than they had planned to give me.
After much back and forth, I managed to claw some of it back, but it wasn't anything like the package that had motivated me to give up 3 years of my life. 3 years that established the company as a force to be reconned with in the industry. Being just a Solutions Architect, unlike Elon I unfortunately didn't have a way to do a shareholder vote. I had to accept the new package. I got burnt by that experience pretty bad, and it’s stuck with me. Companies will promise you everything, and they won’t hesitate to rug pull you. It doesn't matter that it's a small company and your friendly with everyone.
Of course Elon's situation is somewhat different for sure. I understand the people against him on it are saying that he was too close to those constructing the pay package, so it was a bit like he had carte blanche. But when you look at the numbers and read about the crazy targets they were having to hit month after month after month, it's a different picture entirely. I listenned to a podcast a while back with an interview with a bloke that wrote an Elon autobiography, and you really get a sense for the magnitude of the effort and results they pulled off. It's nothing short if incredible.
Given my similar experience I was happy to see Elon eventually got the support of the shareholders. True it’s an insane amount of money, but the targets that he hit in his performance based package were equally insane. And he hit those targets and the value of the company has also increased an insane amount. That was the deal.