Michael Burry's thesis is that aggressive stock-based compensation (SBC) at companies like Nvidia significantly distorts their valuations. By treating SBC as a true owner's cost, a stock appearing to trade at 30 times earnings might actually be closer to 60 times, mirroring dot-com era accounting concerns.

Tesla's proposed 10-year, performance-based compensation plan is more than just a paycheck. It's a strategic mechanism designed to secure Elon Musk's long-term commitment and focus his attention exclusively on achieving Tesla's hyper-aggressive growth targets, like an $8 trillion valuation.

Elon Musk's newly approved trillion-dollar pay package is less about the money and more about securing 25% voting control of Tesla. He views Tesla's future not in cars but in humanoid robots, and he sought this control to direct the development of this potentially world-changing technology.

Unlike shares purchased with personal capital, stock options are often treated like "house money." This incentivizes CEOs to make excessively risky bets with shareholder capital because they capture all the upside but are not punished for failure, leading to poor capital allocation.

Traditional hourly billing for engineers is obsolete when AI creates 10x productivity. 10X compensates engineers based on output (story points), aligning incentives with speed and efficiency. This model allows top engineers to potentially earn over a million dollars in cash compensation annually.

A stock price disconnected from fundamentals can be a powerful tool. As seen with Meta in 2022, a low stock price hinders recruitment. Conversely, a high stock price acts as a valuable currency for equity compensation, allowing companies to attract and retain elite employees, even if investors are skeptical of the valuation.

Elon Musk's ambitious, performance-tied compensation plan isn't just about Tesla. It establishes a powerful precedent for other founders, like those at late-stage unicorns, to negotiate for massive new equity grants by tying them to audacious growth targets, reshaping founder incentive structures.

Despite declining revenues, Tesla's stock is at an all-time high due to its powerful narrative as a world-changing robotics company. This "story premium" makes retaining Elon Musk, the chief storyteller, more critical for shareholders than traditional financial metrics, justifying his massive pay package.

Musk's performance-based compensation sets a precedent for other CEOs to approach their boards with ambitious growth targets in exchange for significant equity increases. This challenges the traditional one-way dilution model for founders and executives.