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

[Crissa]

So the job of the court is to determine if shareholders are too stupid to know what they are voting for.

Again, you're making a mistake.

• The judgement is that Tesla and its banks thought the goals were more likely than not,
• therefore the description of the goals to the shareholders was flawed,
• and therefore the shareholders' intelligence was irrelevant.

You can't know when you aren't told.

-Crissa

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[BannedByTMC]

A single judge threw it out after the vote was conclusive. I'm starting to see the major differences between a Democracy and a Republic now. Thanks for clarifying.

A general reminder for all from the header of this forum:

General Tesla News and TSLA Investing Discussions [WARNING: NO POLITICS]

 

[Kahpernicus]

The glitch is your failure of comprehension. I have never said I think the decision was bad or that the law hasn’t been enforced. I’m just saying the ethics of the process seems flawed to me. From that angle, yes one teeny tiny shareholder overturning a decision the vast majority were ok with is relevant.

It's Delaware law:

The primary consequence of this finding is that the defendants bore the burden of proving at trial that the compensation plan was entirely fair. Delaware law allows defendants to shift the burden of proof under the entire fairness standard where the transaction was approved by a fully informed vote of the majority of the minority stockholders. And here, Tesla conditioned the compensation plan on a majority-of-the-minority vote. 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.

 

[REM]

Page 185

https://courts.delaware.gov/Opinions/Download.aspx?id=359340

Maybe we should just evacuate the current Tesla Board members, and allow Blackrock and Vanguard to stuff it full up. Then maybe we can get down to the real brass tacks here and work on what's truly important: milking TSLA for every single red-cent it's worth; company vision and real changes to the world be damned.

Is that what people here want? I'm going to be real here. If Elon is forced out of Tesla anytime soon (by outsiders, or him giving up due to frustration), I don't see the company making it long term. I really don't.

This court case isn't a win for anyone outside of scumbag short sellers.

 

[Crissa]

This court case isn't a win for anyone outside of scumbag short sellers.

This isn't the case about short sellers. This is the case that perhaps the company overpaid the CEO based upon a discrepancy between internal and external documents.

-Crissa

I may not like the case, and don't like how it came up - I would prefer a more straightforward rule or scheduled review - but if a goal is 70% likely, is it worth the same bonus of if it was a 30% chance?

 

[cvalue13]

From that angle, yes one teeny tiny shareholder overturning a decision the vast majority were ok with is relevant.

my comprehension?

your comment here evidences a near zero understanding of how public corporations work, and why they work that way - nor how putative class and derivative action suits work, and why they work that way


while I’m not chief legal officer and corporate secretary for a public company like Tesla (my company’s not public), I do have a background in this, and know many people who ARE in those positions for for companies like Tesla

including people formally in these positions at Tesla


I understand and don’t fault not being familiar with corporate governance or putative class/derivative action jurisprudence

what I don’t get, however, is the jumping to the conclusion that if something complex and developed over 100 years doesn’t make immediate sense from the armchair, it must be because it’s dumb and broken

 

[cvalue13]

Is that what people here want? I'm going to be real here. If Elon is forced out of Tesla anytime soon (by outsiders, or him giving up due to frustration), I don't see the company making it long term. I really don't.

which, to me, is an indictment of just how careless and sloppy the board/Musk were in this

if it’s that important, don’t handle it like a bunch of banana republic amateurs

 

[REM]

which, to me, is an indictment of just how careless and sloppy the board/Musk were in this

if it’s that important, don’t handle it like a bunch of banana republic amateurs

I think I should just give up on expecting people to honor deals as they have been agreed to. This is an exercise in futility.

And if SpaceX ever goes public, it will end up in the snowballing litigation nightmare that Telsa is becoming.

 

[cvalue13]

I think I should just give up on expecting people to honor deals as they have been agreed to.

the entire point is that it wasn’t the deal people agreed to, in ways that make the agreement illegitimate

I mean, I’m interested in substantive discussion on this

but comments that just assume away the core of issue, just don’t seem serious


there’s a 200pg opinion. It’s worth reading. Not that one must agree with it. But that it may allow people to respond to the substance of it.

obviously a lot more in those 200pg, but:

• shareholders were told the board was “independent” - there is ample evidence this wasn’t true
• shareholders were told the targets were stretch goals - there’s ample evidence that the board knew most of the targets had a 70% likelihood
• shareholders were told the amount was needed to retain Musk - there’s ample evidence Musk would have stayed with much less

the list just goes on and on

which again, is not to say I’m vouching for the decision (I don’t even need to get to that m)

instead to say: is there anyone pissed about this that has ANY familiarity with either the facts or the law, as opposed to only restating defense’s sub-160 character soundbites?

 

[HitchHiker71]

I think I should just give up on expecting people to honor deals as they have been agreed to. This is an exercise in futility.

And if SpaceX ever goes public, it will end up in the snowballing litigation nightmare that Telsa is becoming.

There's a simple solution really - at least once we get the final ruling - which won't occur for another 60-90 days - so any appeal isn't possible until that point in time. The simple solution is to simply amend the existing comp plan from 2018 up until current time - practice full disclosure - literally attach the ruling to the proxy vote - and send out a new proxy vote to ratify the new plan under full disclosure. The board could also opt to create a new plan that is retroactive to 2018 - and proactive for the future - and take the same route.

IMHO people are making way too much of this ruling. There are easy solutions, and lessons learned that Tesla can take forward. Musk is doing what he always does, reacting emotionally as opposed to thoughtfully responding, and in a rather childish manner simply because he didn't get his way and got a hand slap for not following the principles of corporate governance properly. Big deal - adapt and move on - that's what grown adults do - they don't take their ball and go home - and certainly not to a state (Texas) that still doesn't allow any of its citizens to purchase a Tesla given Texas franchise laws still do not allow consumers to purchase cars directly from automakers. Go figure, kinda ironic if that becomes their corporate home base.

 

[REM]

There's a simple solution really - at least once we get the final ruling - which won't occur for another 60-90 days - so any appeal isn't possible until that point in time. The simple solution is to simply amend the existing comp plan from 2018 up until current time - practice full disclosure - literally attach the ruling to the proxy vote - and send out a new proxy vote to ratify the new plan under full disclosure. The board could also opt to create a new plan that is retroactive to 2018 - and proactive for the future - and take the same route.

IMHO people are making way too much of this ruling. There are easy solutions, and lessons learned that Tesla can take forward. Musk is doing what he always does, reacting emotionally as opposed to thoughtfully responding, and in a rather childish manner simply because he didn't get his way and got a hand slap for not following the principles of corporate governance properly. Big deal - adapt and move on - that's what grown adults do - they don't take their ball and go home - and certainly not to a state (Texas) that still doesn't allow any of its citizens to purchase a Tesla given Texas franchise laws still do not allow consumers to purchase cars directly from automakers. Go figure, kinda ironic if that becomes their corporate home base.

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

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.

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!!!!

 

[TheLastStarfighter]

my comprehension?

your comment here evidences a near zero understanding of how public corporations work, and why they work that way - nor how putative class and derivative action suits work, and why they work that way


while I’m not chief legal officer and corporate secretary for a public company like Tesla (my company’s not public), I do have a background in this, and know many people who ARE in those positions for for companies like Tesla

including people formally in these positions at Tesla


I understand and don’t fault not being familiar with corporate governance or putative class/derivative action jurisprudence

what I don’t get, however, is the jumping to the conclusion that if something complex and developed over 100 years doesn’t make immediate sense from the armchair, it must be because it’s dumb and broken

I've served as CEO and on boards for multiple corporations. I still don't know why you're talking legalities with me, since I have specifically said I am not talking about legalities.

 

[TheLastStarfighter]

It's Delaware law:

Your comprehension also flawed. I'm not talking about law.

 

[jerhenderson]

...Except all the banks who had full access to Tesla's financials thought it was a sure bet.

That's what made Tesla lose this court case. Not politics.

-Crissa

I'm still fine with what he made.

 

[BannedByTMC]

. Also, I'll refrain from mudslinging, like calling Elon a threatening, unpredictable lying child.

If the mud fits...It's obvious to many that we are past "peak Elon". His latest threat to start another company for AI and robotics, taking that value away from Tesla, is not going to be seen in a positive light by most rational investors.

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