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I've wondered about this as well. And while not a lawyer, my next question / thought is who would be sued? The judge isn't a target for a lawsuit.
The legal recourse here is for Tesla to appeal the result. Whether that is actually good legal strategy, IANAL and do not have legal opinions. I do have layperson questions though - like when does the appeal get filed
Yes, Tesla the company he started and has made or been heavily involved in making most of the major decisions for since its founding. The company was close to running out of cash when this deal was made. The market cap has grown 10x since the deal was made. Why does there need to be a big downside for him other than his company failing and him wasting years of his life? If anyone could have done it why didn't someone else do it?he bet on his company?
What was the upside and what was the downside of his bet? How much did he have to lose if that was such a bet as you say...
not shareholders voted for package - it was board of directors
judge is not an activist - he is very reasonable man of law. it was a shareholder with only few shares which sued Tesla because in his (and I am sure in many other's) opinion, that is not NOT IN THE BEST INTEREST OF TESLA.
Especially if you take into account annual results.
CNN says otherwise.I thought the board of directions voted for his compensation package and one of the key reasons why it was struck down is because they appeared to have breached their fiduciary duty to said shareholders. Musk, like any other super wealthy person out there, didn't build this company by himself. Yet, he is getting outsized share of its success.
The reason why executives are paid in stock is not entirely because it ties them to company's performance. Yes, it's a component of it. But in my opinion, the true reason is that they get to pay 15% in income tax max. The rest of us subsidize them and their companies.
Attorneys for Musk and the Tesla board argued the pay package was approved by a shareholder vote. Excluding the votes owned by Musk and his brother, 73% of the shares voting in that election supported the pay package.
he bet on his company?
What was the upside and what was the downside of his bet? How much did he have to lose if that was such a bet as you say...
not shareholders voted for package - it was board of directors
judge is not an activist - he is very reasonable man of law. it was a shareholder with only few shares which sued Tesla because in his (and I am sure in many other's) opinion, that is not NOT IN THE BEST INTEREST OF TESLA.
Especially if you take into account annual results.
He did not started tesla.. lol. He invested into tesla as an investor after he sold Paypal (which he did not start either)Yes, Tesla the company he started and has made or been heavily involved in making most of the major decisions for since its founding. The company was close to running out of cash when this deal was made. The market cap has grown 10x since the deal was made. Why does there need to be a big downside for him other than his company failing and him wasting years of his life? If anyone could have done it why didn't someone else do it?
We can sit hear and make all of the moral declarations that we want about how much money any one person deserves to be able to earn but it has nothing to do with whether a judge should overturn a pay package agreed upon by the majority of shareholders.
And please don't misgender Judge Kathaleen McCormick I hear that can get you in trouble on the internet. Clearly you know that he (she) is a very reasonable man (woman) of law so I am not sure why you would want to offend in that way. LOL
CNN says otherwise.
I don't know all of the details of the case if I am being honest. But I have read sources from various sides of the political spectrum discuss it and my take is that he is getting hosed. I am not interested in having a moral argument about how much compensation one person "deserves" for the success of their company. He is the one that started Tesla, had the vision for Tesla, and turned Tesla into a nearly trillion dollar company. The shareholders agreed on this package (as far as I can tell). As a shareholder, I consider it money well spent if it kept him focused on the company and contributed to its success.
well, exactly!You are correct. I missed that part.
I'll need to read into this more. Why would a judge reverse such deal then? It says that even excluding Musk and his brother's shares, there was still a majority who voted in favor. I think the issue at hand is excessive executive compensation, which has been an issue for some time. I don't think anyone really has an answer on how to best address this problem. Income inequality has only been getting worse. On the other hand, as someone who has co-founded a thriving business, I can tell you the risk entrepreneurs take on to create a successful company is very real and it should be rewarded.
...and for their golden parachutewell, exactly!
CEOs must strive to deliver best value to investors
You can split hairs if you want but Musk is listed as a cofounder. He was chairman of the board back in early 2004. They weren’t doing anything at scale before his involvement. He provided most of the early funding. He led the company from a small startup to the most valuable car company in the world. There is no Tesla motors as we know it without Elon. You want to focus on gotchas feel free you didn’t even know the sex of the judge heading up the case but assured us that he (who is a she) is a very reasonable man of law.He did not started tesla.. lol. He invested into tesla as an investor after he sold Paypal (which he did not start either)
who gives a sh!t what is is listed. he might be named as messiah - but he is not...You can split hairs if you want but Musk is listed as a cofounder. He was chairman of the board back in early 2004. They weren’t doing anything at scale before his involvement. He provided most of the early funding. He led the company from a small startup to the most valuable car company in the world. There is no Tesla motors as we know it without Elon. You want to focus on gotchas feel free you didn’t even know the sex of the judge heading up the case but assured us that he (who is a she) is a very reasonable man of law.
You posted a Wikipedia link that says he’s listed as a cofounder. What’s your point? That some guys incorporated a company and didn’t do anything until Elon joined and financed it? Do you want an asterisk next to my statement that he started the company? Put an asterisk.A lawsuit settlement agreed to by Eberhard and Tesla in September 2009 allows all five – Eberhard, Tarpenning, Wright, Musk, and Straubel – to call themselves co-founders.[13]
You put ass "he started the company" - which is not true. He joined like half a year later.You posted a Wikipedia link that says he’s listed as a cofounder. What’s your point? That some guys incorporated a company and didn’t do anything until Elon joined and financed it? Do you want an asterisk next to my statement that he started the company? Put an asterisk.
It changes nothing about his compensation package being denied by an activist judge? Your fixation on this point just shows you have no actual argument to support that decision.
The Tesla board can agree to a new pay package for Musk, according to Varallo, but it can’t deceive shareholders about financial milestones of that package being more difficult to achieve than they actually are, or that it is an independent committee negotiating the terms when Musk is calling the shots, as the judge ruled happened in this case. And he said he doesn’t think that changing Tesla’s incorporation to another state will make it easier to get approval.
“I think most states corporation systems have the idea you don’t lie to people,” he said.
Their argument seems to rest on the idea that it was somehow obvious he would lead the company to become the most valuable car company in the world and therefore these milestones were much easier to hit than advertised. And that the board negotiating the deal was not sufficiently "Independent". I was a shareholder back then and I was prepared for my shares to go to zero (though I couldn't afford that many), it was far from obvious that the company would succeed. Of course nobody would say anything if the judge ruled in favor of the agreement that the shareholders voted to approve... you are acting as if both outcomes are just two heads of the same coin when they are not.The point of the judgement has less to do with the amount he was to receive and instead the deception used to secure the vote. Maybe the vote would’ve ended up the same either way, but the point is you have to follow the rules and be honest about the process and the package being voted upon.
Some people on here posting about not being a lawyer but then trying to discredit the judge because they’ve made decisions you don’t agree with. The problem is the people here are not lawyers and haven’t seen the details of this case and are making those statements based on unproven opinions. If the judge had ruled in Musk’s favor nobody would say anything. Maybe y’all believe your shares have more value with Musk and so if he’s not happy, you’re not happy. Fair enough. But going as far to make claims about things you are ignorant about doesn’t prove anything or help the issue. There are paths to take to get Musk to focus more on Tesla. Such as a newly proposed pay package without the deceptive practices to secure it.
My take is that Musk is spread too thin with all the companies he has invested in. Tesla is not his priority any more and a pay package nor 25%+ of the shares is likely to change that.
That's a fair point. I guess time will tell.What are the chances that institutional investors vote to incorporate in another state? Especially Texas whose new "business courts" haven't even been setup yet. That seems like an unnecessary risk for shareholders. The only risk of staying in Delaware is that Elon will be sad.
The board can just negotiate a new pay package.
I suppose institutional investors generally do not take many risks in the unknown. Otherwise they'd be putting their money in bitcoinWhat are the chances that institutional investors vote to incorporate in another state? Especially Texas whose new "business courts" haven't even been setup yet. That seems like an unnecessary risk for shareholders. The only risk of staying in Delaware is that Elon will be sad.
The board can just negotiate a new pay package.