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

[cvalue13]

I still don't know why you're talking legalities with me, since I have specifically said I am not talking about legalities.

Guess it’s entirely unclear to me how you’re NOT talking about “legalities.”

You’re in effect saying “this process seems unfair.”

The “process” referenced being basic… what?

Sponsored

 

[BannedByTMC]

Looks as if Elon will be proposing a vote to incorporate in Texas. I assume it will pass, no idea of any ramifications of the switch if any, other than the perception of more lax regulations.

 

[HitchHiker71]

Calling a second vote under those parameters sounds reasonable until, it too, is challenged and nullified lol.

If the corporation follows the law and provides full disclosure as was found not to be the case based upon the merits of this recent case (which of course is subject to appeal), then it won't be challenged. If it is challenged then that challenge will be evaluated based upon the merits of a future legal action and tried and decided accordingly.

Also, it's easy to call Elon a "child with his ball" when you aren't the one who just had a multi-billion dollar merit based compensation package stricken from you by one judge and one shareholder. I'd be pissed. And honestly, I don't see how he has the restraint that he does. The man is a once-in-several-generations visionary, and it seems like everyone wants to step on his toes and get in his way.

Elon, along with everyone who actually understands what happened here, which apparently doesn't include the vast majority of the fanboy base that worships Elon, knows full well that while the current compensation package may have been rescinded, it will without any doubt be amended or replaced and he will be made whole (likely more than whole). Rather than making asinine statements like "don't incorporate in Delaware" or other such nonsense, simply do what Elon has repeatedly claimed he's supposedly best at, just fix the problem and move on. That's what adults do. Anyone who somehow thinks that Elon isn't going to get paid here is delusional to put it mildly. The rest is just hyped up ad hominem attacks at the end of the day.

Also, if we are going after Elon's compensation package with such a fine toothed comb then FANTASTIC. Let's have a full scale audit of every single Fortune 500 company from the last 100 years as well as congress, the presidency, and the judiciary. Spread the misery, baby! woooo!!!!

You're certainly allowed to bring suit as you see fit with the above in mind if you believe this is the case. Best of luck with your endeavors in this regard. Considering Elon's compensation package was over 200 times more generous than the next 200 CEO's comp packages combined, somehow I think you'll come to find that you're not even remotely comparing apples to apples and won't have an actual case that any attorney will take up on contingency, but let's not quibble over such unimportant facts right?

 

[cvalue13]

because a guy with 9 shares whined?

earned no pay in 2018 because a guy with 9 shares whined?

yall been reading too much $TSLA xwitter

you say this like it’s self-evident proof of some injustice

when the only thing it self-evidences is that you have near zero understanding of how or why corporate governance and class/derivative suits work

Here’s a think-piece for you:

a kindergarten teacher tells the class that they will all get an A+ on their coloring test if their classmate Joanie is beaten severely

80% of the class vote to severely beat Joanie, and do

despite the fact that a majority of the class voted in favor, and despite the fact that Joanie was by far the one most impacted by the vote, the principle will listen to ANY kid in the class regarding what happened, so long as they were there to witness it. Joanie, a kid that didn’t do it and thought it was wrong, or even a kid that participated but now regrets it. A little boy named Johnnie first comes forward with the account of what happened, and they’re credible.

Now it comes time for the principle to do their paperwork. Based on how the school’s filing system works, it requires the principal to list the name of the aggrieved party to the incident.

So, driven by and consistent with this method of filing system, here is the school principle’s entry on the incident report:

“Johnnie, and on behalf of Joanie, vs The Kindergarten Teacher”

Here’s the paperwork:

And here y’all are, out on the playground, whining about “but 80% of the class voted in favor, and Johnnie wasn’t even the one who got the beating.”


Moments later, Principle comes out says they looked into it further, and it turns out the wildest thing is that before the kindergarten teacher told the kids they’d get A+s for beating Joanie, the teacher had already graded the tests and everyone had already gotten A+’s.

Turns out, the people voting in favor weren’t even aware of the fundamental nature of the decision they were being asked to vote upon.

And here y’all still are out on the playground, still banging the slide with sticks yelling, “but 80% voted in favor! And Johnnie wasn’t even the one who got a beating! And we all wanted to get A+s!”



Now, granted it’s a trite think-piece.

But the analogy’s setting just seemed appropriate.

 

[cvalue13]

Elon, along with everyone who actually understands what happened here, which apparently doesn't include the vast majority of the fanboy base that worships Elon, knows full well that while the current compensation package may have been rescinded, it will without any doubt be amended or replaced and he will be made whole (likely more than whole).

this is what’s so bizarre:

Either:

(1) Tesla just fixes this, or

(2) Tesla is too incompetent to fix this



Meanwhile, either:

(1) Musk doesn’t understand this, or

(2) Musk is using this as subterfuge for riling up the shareholder base he needs to make certain internal maneuvers


The only other alternative? Tesla and Musk know that, if full light is shown on it, they couldn’t re-pass a comp package like this - so Musk is genuinely pissed that the comp package they can defend will be materially less.


Players choice in the above choose-your-own-adventure.

 

[HitchHiker71]

Looks as if Elon will be proposing a vote to incorporate in Texas. I assume it will pass, no idea of any ramifications of the switch if any, other than the perception of more lax regulations.

Just another example of "I'm taking my call and going home." when it comes to how Elon reacts to these types of things.

Let's remember that Elon and Tesla are not synonymous. Tesla existed before Elon, and it will continue to exist after Elon (whenever that point in time may come). Tesla is not Elon, and Elon is not Tesla. Sure he's a great person in many respects and has done and is doing great things, but let's not make the mistake of conflating the two entities into one as so many seem to be doing. I realize Elon is a visionary and has an outsize personality and a huge following - but we cannot and should not get confused here as to the roles of the corporation and Elon as two separate entities. The ruling from the Delaware Chancery courts benefits and protects the corporation and ensures that the leader (in this case Elon) does not have outsize control over that corporation via an independent BoD that isn't beholden to the leader. Elon is not the corporation, Elon is Elon, and Tesla is Tesla. Each has a role to play - with many laws on how those roles are supposed to function to ensure balance. The case simply points out that the BoD (nothing to do with Elon really) screwed up. Sure Elon should not have been as involved in the comp negotiations as he was back in 2018 - but that's water under the bridge. Unfortunately it's Elon that pays the price in this instance. Now it's up to the BoD to fix what they should have done correctly back in 2018 - and I have every confidence that this is exactly what will transpire in the weeks and months head.

 

[cvalue13]

Waiting in an appointment, I feel like outlining a sketch of how this whole comp package concept would/should have come about:


This sketch has two two characters: the aboard, and Corporate Governance Lawyer (CGL). The setting is the very first spitball session regarding the Board’s/Musk’s idea.


BOARD to CGL: “Want to run an idea by you”

CGL: “I’m all ears.”

BOARD: “We want to give Musk what could turn out to be the largest executive comp package in history.”

CGL: “Largest, by like a few bucks more?”

BOARD: “You lawyers have no vision. No, largest by - as Musk puts it - ‘several orders of magnitude.”

CGL: “Say no more. First, no matter how you do that, it’s going to get scrutinized and attract shareholder suits. But second, we can likely defend this so long we follow a couple basics.

BOARD: “Great, let’s hear them.”

CGL: “First, the composition of the board but be self-evidently independent with not even a colorable argument of present conflicts of interest or breaches of fiduciary duty. You can even set up and delegate that decision to a special committee of the board, appointed just to review this proposal. Sound good?”

BOARD: “Easy! We’ll just use current board, composed of:

• Musk’s historical divorce lawyer,
• Musk’s brother
• a guy the Musk’s have known for 20 years, attended their weddings, and who has made 1/2 a billion dollars off that relationship
• a lady whose entire net worth derives from her position on the board
• one of the first PayPal investors, they vacation together, spend the night at each other’s houses, etc., and who invests in all of Musk’s companies
• good ole’ Rupert! He also invests in all of Musk’s companies

how’s that?

CGL: “Aren’t you missing two?”

BOARD: “well, we didn’t list them because they’re both pretty independent looking on paper.”

CGL: “That sounds like a good thing!”

BOARD: “Yeah, but we’ve used a Time Machine and, both those folks resign shortly after this thing passes.”

CGL: “Ok, well clearly to pass the largest comp package in history, you’ll need to set up a special comp committee of true independents, who will stick around to stand behind the decision.”

BOARD: “Nah, we good playa! We stick to this.”

CGL: “Ahem. Ok. Well, next, you’ll want these comp figures to be patently, obviously, necessary to retain Musk -like, he has comparable offers/opportunities elsewhere.”

BOARD: “Is it a problem that Musk has previously and publically said he’s a Tesla Lifer no matter what, and that at present nobody is offering him up to $50 Billion for the next few years of his time?”

CGL: “Ahem. We’ll come back to that. Maybe the last big thing, is that these comp triggers have to based on extreme stretch goals - like, not only are they very unlikely to happen, but nobody but Musk could pull them off.”

BOARD: “We’ll this one’s easy!”

CGL: “Thank god. So, how unlikely are these triggers?”

BOARD: “I mean, some of them, are like 70% definitely going to happen.”

CGL: “Ahem. Ok, are there any corporate emails or text messages saying these things might be like 70% likely to happen?”

BOARD: “Nope!”

CGL: “Ok, ok, that’s good.”

BOARD: “No, their likelihood aren’t in emails or texts, they’re only in several board presentation decks and vetted prognostications established well enough to be presented to the board.”

CGL: “Ahem. Can I ask something?”

BOARD: “Shoot.”

CGL: “What has your General Counsel said about all this?”

BOARD: “I mean, c’mon - it’s a completely open secret Tesla has no functioning General Counsel - Musk hates lawyers, and just chews through GCs because the company’s “supposed” to have one *wink wink*. Only one that’s stuck longer than 1-2 years has been good ole’ Todd.”

CGL: “What does Todd say?”

BOARD: “Todd says be careful about getting a prenuptial agreement before getting married.”

CGL: “Ok, well. safe to say if you do this, like this, it’ll get you in court and you’ll have a snowball’s chance in hell of defending it.”

BOARD: “Roger that. We’ll send it to vote, and remember your advice: say the comp committee is independent, these are stretch goals, and it’s the only way to ensure Musk stays on.”

 

[JBee]

Yet he did in fact threaten to take AI and robotics away from Tesla and start another company if he doesn't get his extra shares and more control. This is really simple. Not to mention I didn't say he was doing it for the money so that's a complete straw man. Some people seem very unwilling to face the obvious facts.

No strawman. You missed the point.
He didn't threaten anything, he just said he wants more influence over what he does.

“From my standpoint, this is primarily about ensuring the right amount of voting influence at Tesla. If I have 25%, it means I am influential, but can be overridden if twice as many shareholders vote against me vs for me. At 15% or lower, the for/against ratio to override me makes a takeover by dubious interests too easy,” Musk wrote.

He can start it wherever he wants, and in fact he already has with Xai months ago so it's already happened. Can't threaten what you have already done.

 

[Deleted member 17810]

 

[heems]

Dude. Court rulings are public records.

https://inequality.org/great-divide/takeaways-from-musk-compensation-ruling/

This isn't some weird clickbait theory, or a long-standing difficulty in factories in the East Bay, or a one-off miscommunication with an employee.

Pathetic is not even bothering to tell the difference between courts and clout-chasers.

-Crissa

Huh? Let me repeat. Show me the evidence that the 73% share holders were misinformed. No one came and asked me during this trial. They are saying I was misinformed. NO I WAS NOT. Did they provide evidence that I was? They must be mind readers. Maybe they skipped me and did a sampling. Any other shareholders who voted for the commission plan were contacted ? Show me the evidence.

 

[Crissa]

Considering Elon's compensation package was over 200 times more generous than the next 200 CEO's comp packages combined, somehow I think you'll come to find that you're not even remotely comparing apples to apples and ...

It wasn't more generous than standard startup terms, though. Tesla's stock just did a huge bounce and made the math huge.

That's one of the reasons I don't particularly like that this is a legal case against a specific person instead of say, a direct regulation or litigation of share of ownership of a public company.

Huh? Let me repeat. Show me the evidence that the 73% share holders were misinformed.

So you knew that Tesla had reported that the conservative case was that they'd pay out this huge portion of ownership, which he'd then sell off and crash the share value?

Or, as happened in court, they were unable to prove that they'd told shareholders this?

-Crissa

 

[HitchHiker71]

It wasn't more generous than standard startup terms, though. Tesla's stock just did a huge bounce and made the math huge.

That's one of the reasons I don't particularly like that this is a legal case against a specific person instead of say, a direct regulation or litigation of share of ownership of a public company.

I hear you and I understand your perspective. IMHO the case really wasn't about Elon. It was about the BoD and the failure to maintain independence, the burden of proof of which was placed upon Tesla to prove otherwise, which apparently wasn't sufficient. While Elon was directly impacted - the case wasn't really specifically against one person - as much as the media and particularly the fanboy base is trying awfully hard to make this out to be the case - the reality is the blame was primarily placed upon the BoD structure and the failure to properly inform shareholders of record according to disclosure rules (laws really) during the proxy vote in 2018.

For my part, Tesla was not a startup company in 2018 - 2010-2012 yes - 2018 no. Musk already owned roughly 20% of the company stock from the startup rounds - this was prior to the 2018 compensation package. The compensation package for 2018 forward - was orders of magnitude higher than other comparable compensation packages for companies in that growth stage as was clearly documented in the case ruling. Not that I agree with the ruling per se - my opinion is immaterial - though for me personally there are parts of the ruling where I got the overall sense that the outsize compensation package was deemed "unfair" to the corporation - and I'm not entirely certain it's the judge's responsibility to make this determination one way or the other - but overall at least to me the ruling was really centered on the BoD not following proper disclosure practices. Elon was the unfortunate target resulting from the decision.

Best guess Tesla will reincorporate in Texas after this all plays out - based upon past performance when Musk moved company headquarters out of California when things didn't go his way. That's not nearly as simple as many seem to think - it'll likely take quite a while for that to actually transpire. Of course, only time will tell.

 

[HitchHiker71]

this is what’s so bizarre:

Either:

(1) Tesla just fixes this, or

(2) Tesla is too incompetent to fix this



Meanwhile, either:

(1) Musk doesn’t understand this, or

(2) Musk is using this as subterfuge for riling up the shareholder base he needs to make certain internal maneuvers


The only other alternative? Tesla and Musk know that, if full light is shown on it, they couldn’t re-pass a comp package like this - so Musk is genuinely pissed that the comp package they can defend will be materially less.


Players choice in the above choose-your-own-adventure.

Musk is good at playing dumb when needed - but he's one smart cookie and he likely had a heads up about this ruling on some level - I don't think it's any accident that a week before he was posting about needing more ownership for example - to continue working on AI/robotics. The timing is suspect IMHO. I therefore take Option 2 above.

Tesla does appear to have acquired more legal talent over the past couple of years in particular - so best guess the Tesla BoD will fix this. I share your concern about repackage of a comp plan like this at least on some level based upon how some of the Delaware ruling reads with respect to the outsize largesse of the compensation package. This leads me to believe that a reincorporation to Texas, which uses a very different tort based corporate legal system as opposed to Delaware Chancery court based legal system, would likely mean Tesla would not endure the same level of scrutiny overall, though admittedly I don't know much about Texas corporate law compared to Delaware, on top of the fact that I'm not an attorney. Just my two cents of course.

 

[cvalue13]

This leads me to believe that a reincorporation to Texas, which uses a very different tort based corporate legal system as opposed to Delaware Chancery court based legal system, would likely mean Tesla would not endure the same level of scrutiny overall

this bit of the ‘strategy’ is a bit unclear to me

while certainly things are different in Texas, it is hard to predict whether they are different in a way that are better or worse (for Tesla, Musk, or shareholders), depending on the issue at hand

I tend to think this squawking by musk results from a mixed combination of two things at once:

(1) just emotional “I’m taking my toys and going home” reactionary revenge (which Musk’s base, largely immune to nuance, will eat up as ‘another instance’ of Musk really sticking it to the man - though it’s unclear Delaware or Texas could give 2 sh*ts either way)

and

(2) strategic posturing for this reincorporation, the smell of revenge, etc., to help propel Musk/Tesla to at the same time make some other key corporate changes that - amidst all the fog and smell of gunpowder - get a bit overlooked. A sort of Pork Barrel opportunity.

 

[Deleted member 17810]

Huh? Let me repeat. Show me the evidence that the 73% share holders were misinformed. No one came and asked me during this trial. They are saying I was misinformed. NO I WAS NOT. Did they provide evidence that I was? They must be mind readers. Maybe they skipped me and did a sampling. Any other shareholders who voted for the commission plan were contacted ? Show me the evidence.

You seem to be taking misinformed as an insult. It's not.

The misinformation from the board to the shareholders:

Page 82:

So unless you were on the board/committee and privy to that information, you (in the collective sense) were likely misinformed on the vote.

Sponsored