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- Tesla’s $1 trillion pay package for Elon Musk is reasonable if he achieves its goals, Eric Shiffer said.
- The tech guru said investors will be thrilled if the CEO hits the deal’s challenging targets.
- Tesla’s 2018 pay deal for Musk was similarly ambitious, and he achieved its targets, Shiffer added.
Tesla’s $1 trillion pay deal for Elon Musk has triggered the same skepticism that greeted his ambitious 2018 pay deal, tech investor Eric Schiffer has said.
In a wide-ranging interview with Business Insider, the CEO of private-equity firm the Patriarch Organization said Musk’s previous deal also tied a “mammoth” payout to extremely challenging goals.
That agreement required Musk to grow Tesla’s market value from around $60 billion to $650 billion, its 12-month revenue from below $20 billion to $175 billion, and its adjusted profits from under $1.5 billion to $14 billion to get the full compensation.
Schiffer recalled the deal was labeled “insane” and “crazy,” with commentators declaring there was “no way in hell he’ll ever achieve that.” “And you know what, he did,” Schiffer added.
Under the company’s latest plan, Musk would have 10 years to raise Tesla’s market value from around $1.3 trillion to $8.5 trillion, boost its adjusted profits to $400 billion, deliver 20 million Tesla vehicles and a million Bots, reach 10 million active full self-driving (FSD) subscriptions, and bring a million robotaxis into commercial operation.
“If he were to accomplish that, investors would do backflips, and of course, he should be compensated,” Schiffer said. Awarding $1 trillion worth of stock to a CEO who’s built an $8.5 trillion company would be reasonable, he added.
Shiffer said the AI boom isn’t a repeat of the dot-com bubble
Schiffer told Business Insider that the AI frenzy may have shades of the dot-com bubble at the turn of this century, but he’s not worried about a crash.
Many dot-com players were loss-making and had valuations “astronomically out of whack,” Schiffer said. By contrast, Meta, Alphabet, and the other tech titans leading the AI charge are “money gushers” showing no signs of slowing down.
Schiffer gave the example of Oracle, which recently disclosed that its expected contract revenue more than quadrupled year on year to $455 billion last quarter, thanks to strong AI demand.
The software giant’s stock price surged as much as 43% in a single day, boosting its market value by nearly $300 billion at its peak, as investors banked on years of rapid revenue growth.
AI companies are “priced close to perfection,” but their valuations also reflect a “continued escalation of earning estimates that I don’t think are going to slow down, frankly,” Schiffer said. “I think there’s more to come.”
His advice on how young people can get ahead
Schiffer, who has 18-year-old twins, said young people face a “more difficult” backdrop than previous generations between political divisions, wars, an affordability crisis, and AI-fueled job losses.
He advised them to figure out their strengths and apply them to activities that are “profoundly human,” where people maintain an advantage over AI. He gave the examples of healthcare and enterprise sales, where trust and relationships are vital.
Schiffer also recommended they “get fluent with AI — learn how to master it, write it, work it.”
He added that “people are not going away,” and knowing how to work with AI will benefit many industries for years.
Shiffer also offered some advice for wealthy parents on not raising entitled children.
“Do not give your money to your kids,” he said. “That is not the move — it will not serve them or help them create agency, develop their own future, build their own security, or make things happen on their own.”
For those children who receive large sums from their parents, Schiffer urged long-term responsibility over frivolous spending.
“That’s a great gift, something you want to steward and manage and help to grow,” he said.
Read the original article on Business Insider
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