Elon Musk isn’t being offered enough money

Apparently this is just terrible:

On Friday, Tesla’s board of directors rolled out a pay package proposal for CEO Elon Musk that could, if he plays his cars* right, turn the billionaire into the world’s first trillionaire. In a section of Tesla’s latest stock market update that began: “Yes, you read that correctly”, the board outlines everything Musk has to do to get his hands on that performance-based trillion. Which, to be fair, is a lot. Tesla needs to reach a market cap of $8.5tn, eight times its current value, in 10 years to get Musk the payout. Many analysts believe Tesla is already overvalued, so this is no small task.

OK, so big task, likely not to be achieved and there we are. Except Musk is being offered too little money here.

Think of the Ultimaum Game. That bit of experimental economics which explores human ideas of fairness. There’s $100 to be split, first person decides upon the split. Second then decides whether to accept it or not. Offers of anything worse than a 70/30 split are near always rejected. Thus humans have an innate sense of fairness and are willing to punish themselves - by not receiving $25 buckshee and free - in order to do that socially useful teaching of what is indeed considered to be fair.

$1tr of $8.5tr is 12%. An 88/12 split. This is unfair by those ultimatum game standards. Elon Musk is not being offered enough. QED.

Which is interesting, don’t you think?

*BTW, yes, we do like that, excellent little wordplay there.