Judge Rules Against Elon's Pay Package [⚠️ ADMIN WARNING: NO POLITICS]

[BannedByTMC]

A Delaware Chancery Court judge has voided Tesla (TSLA) CEO Elon Musk's $55 billion pay package. A Tesla shareholder had sued Musk and Tesla, arguing the pay package was excessive and that the company's board "breached their fiduciary duties." In the decision, the judge says "the compensation plan is subject to review under the entire fairness standard, the defendants bore the burden of proving that the compensation plan was fair, and they failed to meet their burden," and that "The plaintiff is entitled to rescission." The ruling can be appealed. For now, though, it means Tesla's board will have to figure out a new compensation plan for Musk, who will see his overall net worth take a hit from the decision.

https://finance.yahoo.com/video/elon-musks-tesla-55b-pay-221122612.html

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[BannedByTMC]

Since it's a public company it's not "his", it's "ours", (if you're a shareholder). But if he want's to take it private for $420 I won't complain ?

 

[jookyone]

Tesla's board will have to figure out a new compensation plan for Musk

I see your $55 Billion and raise you $58 Billion. Just let me have one.

 

[BannedByTMC]

This seems to be the main area of contention from the ruling:

But the defendants were unable to prove that the stockholder vote
was fully informed because the proxy statement inaccurately described key directors
as independent and misleadingly omitted details about the process.

A good thread on reddit, especially comments by hesh582:

The package wasn't ruled "too big". The process by which the package was created was ruled to be improper.

There are no laws against paying your CEO too much, but there are delaware laws about how compensation is arranged that kick in when the CEO has "control" over the company.

Tesla argued and acted as if Musk did not control the company, and the compensation package was created by a independent board who could be assumed to have the company's (and not the CEO's) best interests at heart. If that had been the case, the way the board presented the proposal to shareholders would have been sufficient.

What this ruling really does (and why it might be important for reasons wholly unrelated to compensation...) is find that the board was not independent. This has been a messy area for a while now and a lot of other courts have slipped away from addressing it, but this court finally put its foot down and found that the board (at the time of the package) was made up of Musk loyalists, family members, and people with such strong personal and financial ties to him that they cannot be treated as an independent body when his interests are at stake.

 

[JBee]

I see a Tesla industry split coming so EM can maintain control in private companies instead, which is what he is actually after with the package, not the money.

This split will be AI (FSD?) and Optimus, possibly with manufacturing tech, drivettains and actuators, and maybe also solar and battery storage.

With that EM would control enough Tesla "supplies" to maintain control, should a hostile takeover occur at Tesla directly, Tesla would not have the autonomy it has now to survive.

Given the case, it seems there are already shareholders who are trying to nuture his control, so his concerns are warranted.

 

[jerhenderson]

Let's put it to a shareholder vote. I'm in favor of the pkg standing.

 

[Pops]

The judge ruled this way because everyone who put the package together was beholden to Elon. The game was rigged. That is not a board it suppose to work. They have a fiduciary duty to the company and its shareholders, not a single person.

Should he have been compensated well? Yes. But this was too much. Even Elon knew this, and they took steps to give back some of the comp before this trial, but clearly it didnt help.

 

[Pops]

Elon's contribution cannot be understated, but I think Tesla would be better off without him going forward. This is normal for any startup company to change hands as it grows into new phases.

• He is no longer heavily engaged with Tesla, Twitter takes most of his time.
• Poor choices like "Tesla Vision" and no wiper sensors are attributed to Elon.
• Retaliating against Disney with Tesla because they stopped advertising on X.
• He has become an attention seeking spectacle that is a distraction from Tesla's mission.

 

[PilotPete]

Elon's contribution cannot be understated, but I think Tesla would be better off without him going forward. This is normal for any startup company to change hands as it grows into new phases.

• He is no longer heavily engaged with Tesla, Twitter takes most of his time.
• Poor choices like "Tesla Vision" and no wiper sensors are attributed to Elon.
• Retaliating against Disney with Tesla because they stopped advertising on X.
• He has become an attention seeking spectacle that is a distraction from Tesla's mission.

I don’t know that I agree. I don’t think Tesla has reached a level of critical mass that can succeed without him, especially in the international world. He is very involved with Tesla, and the accusation regarding Twitter appears to be somewhat overstated. As for the attention, I think the media plays a far bigger part in it than EM does. They love to build someone up and then tear them down.

The biggest asset Tesla holds at the moment is their IP towards AI. With the ethical issues that could exist in the future with AI, there are few people or companies (and NO governments) that I trust with that ability. After hearing his talks on the subject, I trust EM until he does something that makes me not trust him. That’s a whole lot more than I’ll give almost anyone else.

 

[PilotPete]

The judge ruled this way because everyone who put the package together was beholden to Elon. The game was rigged. That is not a board it suppose to work. They have a fiduciary duty to the company and its shareholders, not a single person.

Should he have been compensated well? Yes. But this was too much. Even Elon knew this, and they took steps to give back some of the comp before this trial, but clearly it didnt help.

The targets that were established in 2018 were unrealistic, and the compensation was just as wild. But he met them, and exceeded them for longer than he needed. Some yo-yo with a single share (might have been a single digit number of shares) brings a suit like this? There is so much about this that doesn’t smell right.

 

[Crissa]

It's a minority using hindsight and litigiousness to veto something the majority of shareholders supported.

I really hate shareholder 'class action', they rarely pay out, even though they know who holds the shares.

Whether or not you approve of the pay package, this method of dealing with it does nothing for the future or other companies' policies,

-Crissa

 

[charliemagpie]

I was a shareholder in 18, it seemed a huge target. Even after suffering a share price drop, those shares are still worth tenfold.

I don't feel ripped off if he gets his bonus.

 

[BannedByTMC]

The biggest asset Tesla holds at the moment is their IP towards AI. With the ethical issues that could exist in the future with AI, there are few people or companies (and NO governments) that I trust with that ability. After hearing his talks on the subject, I trust EM until he does something that makes me not trust him. That’s a whole lot more than I’ll give almost anyone else.

Elon has given us enough evidence that he's far from a consistently rational actor that I do not trust him with controlling or guiding AI.

https://www.forbes.com/sites/paulta...-twitter-ai-is-actually-woke-hilarity-ensues/

 

[ÆCIII]

I agree 100 percent with SMR's recent video on this subject.

- ÆCIII

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