What does Elon Musk’s utility function look like? On Wednesday Tesla shareholders approved a comically large pay package designed to keep Musk employed as Tesla’s chief executive officer. When we last talked about this pay package I mentioned how superfluous it seems to be. If Musk hits all of his revenue and earnings targets over the next 10 years, and grows Tesla to be worth $650bn, he could make more than $50bn from his new package. But if Musk grows Tesla to be worth $650bn over the next 10 years — whether or not he hits those revenue and earnings targets — he will make more than $130bn just from the Tesla shares he already owns. The extra $50bn on top of the $130bn would be nice, I guess, but … how? Like what will he do with it? Buy more flamethrowers? You can sort of see Tesla’s reason for giving him the extra $50bn: he doesn’t need to be CEO to keep his existing shares, which are worth billions of dollars, but he does need to stick around in management to get the extra $50bn....
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