Musk also argues that since he pays workers with equity, their salaries are great. And that’s at least partly true. The problem, though, from a labor perspective, is that you can’t eat equity…it doesn’t put food on the table. Also giving comp out in equity is part of the reason why employees have so little power. They can’t cause problems within the company or shares might drop and they will “lose” money even though they never really had it in the first place…
I know I’m old but I’ve never understood some of the “perks” of tech and other business that have popped up in the past decade. Pay me good money and give me a good manager. I’ll buy my own darn frozen yogurt - or not.
@doschicos - I think I understand them: in a bad job economy with completely eroded or nonexistent organized labor, they can get away with it. It’s that simple.
@marvin100 – you condemn Musk for compensating his employees with ownership in the company. How can you complain about the employees having some skin in the game? And you better believe you can “eat” equity.
Some things you left out of your quote:
I can eat a lot of food with $70-100K.
Less workers getting hurt – obviously a diabolical plot to keep them chained to the assembly line longer.
What’s wrong with the company having some goofy perks? Do you prefer a humorless, boring place where people refer to each other as “work unit #451”?
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Not if most of it is in equity (the quote is about “total compensation,” not salary or wages).
Nothing as long as it’s not used as an excuse to prevent labor from organizing. After all, organized labor is the folks who brought you the weekend, the 8-hour workday, overtime, minimum wage, child labor laws, OSHA, and much, much, much more.
Employer policies that are nice to employees (whether in pay, other compensation, or other things like work environment) exist for one or more of the following reasons:
a. Avoiding too many employees leaving out of dissatisfaction, in environments where there is competition among employers for employees.
b. Avoiding employees getting dissatisfied enough to form a union, in environments where there is little or no competition among employers for employees.
c. The result of negotiations with the union, if one is already present.
And, in rare occasions and usually privately held family businesses:
d. because it’s the right thing to do
@ucbalumnus - precisely. In this case, it’s b and maybe a little of a. This is particularly interesting to me since so many people (liberal and conservative) uncritically lionize Musk, which is a bit surprising since this came out almost two years ago: [Elon Musk’s solar company used panels made by cheap prison labor for a big taxpayer-subsidized project](Elon Musk's solar company used panels made by cheap prison labor for a big taxpayer-subsidized project | Grist)
I think Elon Musk’s reputation is heading for a crash. Many people were a bit taken aback by the hyperloop fiasco.
As for the cheesy ‘perks’, they often provide two functions. Many of them (like free food) keep employees on the premises (and probably talking about work) when they might otherwise have gone out for lunch. Second, things like frozen yogurt are dirt cheap–probably costs a dollar or two per employee per day, and not all of the employees will take one up on it. But if you were to offer the cash value of that to the employees, they would probably regard it as an insult.
(Similarly, if your friend helps you move and you split a six pack with her, awesome. If your friend helps you move and you give her $5, she will be very insulted.)
To be clear, that $70,000 to $100,000 is in equity (not salary), and it fully vests in 4 years. They also have a great ESSP plan, that allows them to purchase stock, every 6 months, at it’s lowest value during those 6 months, at a 15% discount (which means they earn 15%, right from the start).
Equity is a good thing, and why it’s a common perk for upper level management.
If his employees do not like getting equity, they can work for GM, Ford, …
Organized labor is also the folks who brought you lazy, arrogant, unmotivated, uncompetitive, and unproductive workers.
No, @sorghum . They’ve always existed. As Adam Smith wrote in Wealth of Nations:
Right…I hear there are tons of automotive jobs out there.
What’s wrong with that? The whole point of providing equity as compensation is to incentivize collective ‘hard work’. Everyone pulls their weight, shares go up, everyone benefits.
Am I missing something?
You gotta love people accepting equity for work. Very few realize exactly how risky it is from a financial standpoint. i guess the thrill of changing the world eases the financial hardships.
From the company side it is a total win, the investing public basically pays your salary expense. lol. Viva la Capitalism.
"prof2dad wrote:
If his employees do not like getting equity, they can work for GM, Ford, …
Right…I hear there are tons of automotive jobs out there."
Is not that the point? Automotive jobs are scarce so anyone provides these jobs is going to have more bargaining power, as Musk has demonstrated.
Some of you act as if Tesla is raking in huge profits and acting out of greed here. Last I checked, their operating (net) profit margin is -17.7%… they are bleeding money. Providing equity makes 100% sense in their case.
Full unionization at this point in time would kill an already fragile company.
That’s $70,000 to $100,000 more over 4 years.? So $17,500 to $25,000 a year more?
and then you have to stay 4 years for that to be vested to actually get that?
Did you know: Toyota, and Subaru US factories are union free, and both provide excellent benefits to workers. The companies are both remarkably healthy, employee satisfaction is high, and working conditions are actually better than they are at unionized US factories.
See reply #5. Taking good care of your employees to avoid either or both employee turnover or desire to form a union is not a surprising motivation, and one or both of these motivations is probably the main motivation in most employers in most industries that do so.
When employers do not treat employees well, it is commonly a situation where the employees are easy to replace in the local job market.