SpaceX / Tesla private equity compensation

Tesla / Engso kool
Aug 7, 2018 24 Comments

Now that there are talks about taking Tesla private, with a structure similar to SpaceX, I’m curious how SpaceX employees feel about their stock compensation. Can you actually sell shares easily every 6months? Do you generally get bigger TC because of the limited liquidity? Is there ESPP? Is it all gonna be paper money similarly to other startups?

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TOP 24 Comments
  • SpaceX / EngSlaveX
    We can sell every 6 months, typically summer and winter, if there's enough venture capital to buy the shares. Though some times when rockets blow up they cancelled "buy back" and you'll end up waiting a year for the opportunity to sell again. Wouldn't count on TC to go up a lot after going private. Salaries are lower for the privilege of owning the exclusive stock. Management renigs, reduces, and delays raises company wide. They also delute shares by issuing tons more to raise capital (basicly printing their own mony).
    Aug 7, 201811
    • Tesla / OtherqSXN35
      Sounds like a startup. VPs will be fine, everyone else screwed.
      Aug 8, 2018
    • Tesla jywkop
      Any espp ? How the valuation works? Is it like a private stock markeplace with the value being set by company as fixed price in that window or it's auction ?
      Aug 8, 2018
    • SpaceX / EngSlaveX
      Chiefs and maybe VPs get A stock where when the company goes bankrupt they still get most of the stock value. B stock for venture capitalists where they get some value back and C stock for the employees where you get $0.01 per stock when the company goes belly up. All are valued the same. The price is evaluated by a private accounting firm hired/guided by the CFO.
      Aug 8, 2018
    • SpaceX / EngSlaveX
      In order to raise more money/pay the employees less cash they just started ESSP, there is a discount, can't exactly remember right now but I think its 5% off the value of the stock. You can divert up to 15% of your salary this. The catch is the money sits in an account until the next valuation then gets purchased at the higher price and not stock price at the time when the money was taken from your pay check (assuming the stock goes up)
      Aug 8, 2018
    • Tesla / Engso kool
      OP
      At the lower price you mean?
      Aug 8, 2018
    • Tesla / Engso kool
      OP
      Also I don’t understand how stock with such different liquidation characteristics can be valued the same
      Aug 8, 2018
    • SpaceX / EngSlaveX
      ESSP gets purchased with the money in the employees holding account at the new stock value. Private companies are more flexible with financial rules, including liquidity rules.
      Aug 8, 2018
    • Tesla IKk55gW
      ESPP with non liquid stock seems like a very bad idea. Just give out more RSUs instead.
      Aug 8, 2018
    • Magenic GrtB16
      what is about choice between rsu and options in case of going private? how options works in spacex?
      Aug 9, 2018
    • SpaceX / EngSlaveX
      We have people with both RSUs and Options. When the company was small (less than ~2-3k people) they had options but then they moved to RSUs going forward about 4 or 5 years ago.
      Aug 9, 2018
  • Microsoft void* ptr
    What happens to publicly held shares?
    Aug 7, 20185
    • Microsoft TCOGTFO
      You can hold onto them or sell for $420/share. Smart move would be to hold.
      Aug 7, 2018
    • Apple Interobang
      I feel dumb for asking, but why is it smart to hold? I assume it’s because the price could still go up, but how does someone know how much their private company RSU’s are worth? Sorry, I don’t know anything about stock when it comes to private companies
      Aug 7, 2018
    • Microsoft void* ptr
      Knew i should have bought at the most recent sub 300 dip!
      Aug 7, 2018
    • Microsoft TCOGTFO
      @apple don't feel dumb. Very reasonable question. Today the investor expectations on short term steps toward profitability hurt Tesla. Tesla is not nearly mature enough to be thinking about consistent profit nor is the end product there (true self driving, more ubiquitous products). Very much an R&D stage. Being (by far) the most shorted stock also means there's a huge population out there who is financially motivated to see Tesla fail - and at this scale that can have real impact on investor/consumer psychology. Long term if Tesla executes, the company will be worth billions more than it is today. Stock that (best case) is worth $700 in 3 years could be worth $xxxx in 5-7 years. Investing is all about opportunity cost so if you think you can do better in that time period (maybe you know if a crypto project that will boom, for example) then it's wise to sell at $420 and move the money elsewhere. But the conservative investor would hold here if they go private.
      Aug 7, 2018
    • Apple Interobang
      Thank you!
      Aug 8, 2018
  • Microsoft TCOGTFO
    Anyone with a 100 level understanding of finance understands how much more beneficial going private would be. Net TC from equity probably goes way up as the public mob of shorters can't impact stock price anymore. Company value will rise as investors are left to purely speculate on sales numbers. Public markets have been holding Tesla back. They may not be profitable for a while and that's okay
    Aug 7, 20183
    • Compass / Eng
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      This
      Aug 7, 2018
    • Tesla / Engso kool
      OP
      Net TC goes way up only if you can easily sell, right?
      Aug 7, 2018
    • Microsoft TCOGTFO
      Yes/no. I'm assuming liquidity isn't a problem (as you should). The real boost is that the value of Tesla as a company will skyrocket as a private company for a multitude of reasons that Elon actually explained well in that email he sent out to you guys. Even if you're limited in sell windows, Tesla *will* go public again (assuming it does go private). And that's your real pay day
      Aug 7, 2018
  • Restoration Hardware Holdings yrUO82
    It all depends. Every private structure is different.
    Aug 7, 20181
    • Tesla / Engso kool
      OP
      As far as I understand the intention is to copy SpaceX structure, hence the question for people familiar with SpaceX structure.
      Aug 7, 2018

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