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Elon Compensation Package
- Thread starter Buckminster
- Start date
adiggs
Well-Known Member
I saw the proposed fee. And in a way I'm glad they asked that much. Because I think that fee award might help get the whole mess over turned on appeal. I'm a shareholder that voted for this compensation plan, and I was ecstatic to do. Who ever heard of a CEO who believe in the company and prospects so much that he wanted to be paid nothing for 10 years, unless he built the company up and achieved multiples of the market cap at time. No financial engineering - I'm going to grow this thing 12x.
Yes I wanted to vote and support that guy. This judgement has taken that away from me. And it could easily be wishcasting, but I think such a large ask will help the appeal.
Yes I wanted to vote and support that guy. This judgement has taken that away from me. And it could easily be wishcasting, but I think such a large ask will help the appeal.
Artful Dodger
"Neko no me"
Agree completely. I'm a shareholder because of the affirmative vote on Elon's CEO compensation package.
I literally bought my TSLA shares just weeks after the Compensation Package was approved by shareholders, because it removed the last doubt I had about the outcome of Tesla's 'hail mary' play on the Model 3 car.
Elon wouldn't quit then, and he won't quit now. Neither will I.
Cheers to the Longs!
Artful Dodger
"Neko no me"
The following comment is reproduced here from the Main forum #446,393 (Mar 04, 2024)
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She can't (but it'll still take a year or more to undo what she's done). Another case was overturned on appeal in the Delaware Supreme Court which ruled that the "entire fairness doctrine**" DOES NOT overrule the Investor franchise. Simply put, the judge isn't allowed to put her view on a contract above Investor's will as expressed in a vote. This is IMPORTANT, so here's more:
**The "entire fairness review" is the legal mechanism by which Judge McCormick shifted the burden-of-proof in this case from the plaintiff to the defendant: (more here as a start)
[PDF] The Business Judgment Rule and the Entire Fairness Doctrine | rc.com
The Judge doesn't get to override Shareholders on 'whole fairness' grounds, in spite of her attempt to paint the vote as being invalid because Investors were 'uninformed'. Yeah, like the way she didn't inform readers of her 200 page Manifesto that Elon was also voted in by Shareholderes as CHAIRMAN of the Board and he was relected numerous times (so of course he had influence and close relationships with the Board. So what?! That's NORMAL. Show that's a problem, or illegal! Else, fizzle...)
So here's the Legal Deal:
Corporate Governance Guidelines - nasdaq investor relations | ir.nasdaq.com
Only Tesla's Independant Board Members participated in the CEO Comp Plan negotiations, and the plan itself was devised by an outside group of professional Compensation consultants and acedemic advisors. In the Financial Press at the time, the CEO Comp. plan was widely touted as wildly ambitious, impossible, and a great deal for shareholders if it works. Which it did. That group no longer exists; it is not a simple matter of voting again with new information (the Judge set up this problem for the future of any comp. plan).
So, this judgement inevitably will be overturned on appeal. An experienced Judge shirley would know this (she's the Chief Justice of the Chancery Court, BTW so she's not inexperienced). No, very likely she knew that, and issued her 200 page Manifesto on Billionaire "Fair Pay" anyway, knowing full-well that the appeal would stretch well beyond Jan 2025 before her judgement is overturned.
Here's a rough outline of the timing for the Appeal process:
Why is this CYNICAL you may ask? Well, the Judge wrote in her 'findings' that Elon "controlled the timing" of the Comp Plan negotiations? (yeah, so? didn't show that it affected the outcome, though). And per the above, we see that Judge McCormick, by wating 14 months from the close of oral arguments until delivering her decision, CONTROLLED the timing of the appeals outcome (which she shirley knew would be negative for her), so that the APPLEAL would not influence or affect her election to the U.S. Senate.
Why is that a problem? Her agenda is clearly Anit-Billionaire, and specifically Anti-Elon because of the out-sized confidence placed in him by Tesla shareholders (81% per your comment). Would-be Sen. McCormick could very possibly co-sponsor a Senate Bill to impose a 1% annual Tax on Billionaire's stock holdings.
This is bad. Bad for busines, bad for the economy, and bad for investors. Elon 's shares are not readily negotiable for cash (as would be required to pay annual taxes). When a large insider sells, the stock crashes (we saw 100:1 drops in Market Cap vs. value of Shares sold). The stark reality is that Market Cap is not the same thing as Enterprise Value, and it makes extremely poor business sense to sell a fixed portion on a predictable timetable (c.f. hedge fund 'snarks' smelling blood in the water). Some things take time, like Model 2, which will be 8 years in the making.
TL;dr Judge McCormick may be setting herself up to us this Delaware Chancery Court decision to launch a political career in the U.S. Senate with omious consequences for any business which trades in public markets, as does TSLA on the NASDAQ stock exchange.
P.S. The Judge in this case closed here opinion by writing "The Plaintiff is entitled to recision". I counter that the Defendant is entitled to spend any amount he sees fit in the U.S. Senate race in Delaware in 2024, and he'd be doing us all a favor if he does so boldly, as he excercies his 1st Amendment Rights. As the U.S. Supreme Court ruled in 2010, "Money is Speech". I hope Elon will speak LOUDLY if this Judge/U.S. Senator wannabe acts as I have outlined is possible above, and with the full leverage of all his social media influence.
Regards,
Lodger
#Predict
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She can't (but it'll still take a year or more to undo what she's done). Another case was overturned on appeal in the Delaware Supreme Court which ruled that the "entire fairness doctrine**" DOES NOT overrule the Investor franchise. Simply put, the judge isn't allowed to put her view on a contract above Investor's will as expressed in a vote. This is IMPORTANT, so here's more:
- @_SFTahoe tweet| Delaware ruling could be overturned
- Amy on X: "DELAWARE COURTS: “Two seminal state Supreme Court opinions say that under Delaware corporate law, the sanctity of the shareholder franchise tops entire fairness review, Chief Justice Collins Seitz wrote.” “Sanctity of the shareholder franchise” What does this mean??…" /X
-
- State Supreme Court overturns judge's ruling prohibiting Tesla dealership in Delaware
- Delaware High Court Rules Shareholder Franchise Right Question Tops Entire Fairness Test | Delaware Corporate & Commercial Litigation Blog
- Is the Delaware Supreme Court Pushing Back on Chancery’s Suspicion of Non-Competes? | Ballard Spahr LLP
**The "entire fairness review" is the legal mechanism by which Judge McCormick shifted the burden-of-proof in this case from the plaintiff to the defendant: (more here as a start)
[PDF] The Business Judgment Rule and the Entire Fairness Doctrine | rc.com
The Judge doesn't get to override Shareholders on 'whole fairness' grounds, in spite of her attempt to paint the vote as being invalid because Investors were 'uninformed'. Yeah, like the way she didn't inform readers of her 200 page Manifesto that Elon was also voted in by Shareholderes as CHAIRMAN of the Board and he was relected numerous times (so of course he had influence and close relationships with the Board. So what?! That's NORMAL. Show that's a problem, or illegal! Else, fizzle...)
So here's the Legal Deal:
- WE ARE LEGAL ADULTS;
- WE ARE LEGALLY RESPONSIBLE,
- WE VOTED AS LEGALLY ENTITLED
- THE JUDGE CAN'T OVERIDE THAT, LEGALLY.
“Independent director” means a person other than an officer or an employee of the company or its subsidiaries, or any other individual having a relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Corporate Governance Guidelines - nasdaq investor relations | ir.nasdaq.com
Only Tesla's Independant Board Members participated in the CEO Comp Plan negotiations, and the plan itself was devised by an outside group of professional Compensation consultants and acedemic advisors. In the Financial Press at the time, the CEO Comp. plan was widely touted as wildly ambitious, impossible, and a great deal for shareholders if it works. Which it did. That group no longer exists; it is not a simple matter of voting again with new information (the Judge set up this problem for the future of any comp. plan).
So, this judgement inevitably will be overturned on appeal. An experienced Judge shirley would know this (she's the Chief Justice of the Chancery Court, BTW so she's not inexperienced). No, very likely she knew that, and issued her 200 page Manifesto on Billionaire "Fair Pay" anyway, knowing full-well that the appeal would stretch well beyond Jan 2025 before her judgement is overturned.
Here's a rough outline of the timing for the Appeal process:
- Her findings were published on Jan 30, 2024 which starts a clock ticking
- she has 60 days after that to issue a final judgement (after negotiations inevitably fail between the parties)
- That's April 1st, 2024 which is the earliest possible date on which Tesla can file an appeal, but I believe they have at least 30 days to do so
- That's May 1st, at which time the Delaware Supreme Court has to decide if they will hear the appeal (they'd risk chaos if they said no), then they have to schedule oral arguements for the appeal, give that at least another 120 days (or more)
- That's takes us to at least Sep 01; Call it 5 days of oral arguments, a round of final remarks from each side, and then the appeal goes to the members of the Court to deliberate. Then its likely 6 months to get a ruling, that takes us to ~Mar 1st, 2025
- there is no incumbent running for re-election in Nov 2024 (Dem Senator is retiring)
- there's 1 announced Dem. candidate who is a 1-term Member of the House (junior)
- Democratic nominations for Senate close on Sep 08, 2024 in Delaware
- by that time (according to the timetable above), Judge McCormick will have finished her legal role in the Elon Musk's CEO Comp case, and will feel free to pursue any larger political ambitions she may have... (did you READ THE MANIFESTO?)
- She began "Does the richest man in the world deserve"
- The Senate seat will be voted on on Election Day: Tues, Nov 05, 2024
- Newly elected Senators will be sworn in at Noon E.T. on Jan 03, 2025
Why is this CYNICAL you may ask? Well, the Judge wrote in her 'findings' that Elon "controlled the timing" of the Comp Plan negotiations? (yeah, so? didn't show that it affected the outcome, though). And per the above, we see that Judge McCormick, by wating 14 months from the close of oral arguments until delivering her decision, CONTROLLED the timing of the appeals outcome (which she shirley knew would be negative for her), so that the APPLEAL would not influence or affect her election to the U.S. Senate.
Why is that a problem? Her agenda is clearly Anit-Billionaire, and specifically Anti-Elon because of the out-sized confidence placed in him by Tesla shareholders (81% per your comment). Would-be Sen. McCormick could very possibly co-sponsor a Senate Bill to impose a 1% annual Tax on Billionaire's stock holdings.
This is bad. Bad for busines, bad for the economy, and bad for investors. Elon 's shares are not readily negotiable for cash (as would be required to pay annual taxes). When a large insider sells, the stock crashes (we saw 100:1 drops in Market Cap vs. value of Shares sold). The stark reality is that Market Cap is not the same thing as Enterprise Value, and it makes extremely poor business sense to sell a fixed portion on a predictable timetable (c.f. hedge fund 'snarks' smelling blood in the water). Some things take time, like Model 2, which will be 8 years in the making.
TL;dr Judge McCormick may be setting herself up to us this Delaware Chancery Court decision to launch a political career in the U.S. Senate with omious consequences for any business which trades in public markets, as does TSLA on the NASDAQ stock exchange.
P.S. The Judge in this case closed here opinion by writing "The Plaintiff is entitled to recision". I counter that the Defendant is entitled to spend any amount he sees fit in the U.S. Senate race in Delaware in 2024, and he'd be doing us all a favor if he does so boldly, as he excercies his 1st Amendment Rights. As the U.S. Supreme Court ruled in 2010, "Money is Speech". I hope Elon will speak LOUDLY if this Judge/U.S. Senator wannabe acts as I have outlined is possible above, and with the full leverage of all his social media influence.
Regards,
Lodger
#Predict
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Artful Dodger
"Neko no me"
Let's step back for a moment, to get some historical perspective to another great corporate misdeed which took thousands of innocent lives and affected whole communities for generations:
Exxon:
Tesla:
Exxon paid $500M for destroying a fishery and affecting countless lives. Now this law firm wants to be awarded $5.9B worth of unrestricted TSLA stock so they can do some real damage to the enviroment (c.f. the Tesla Mission).
TL;dr Disgraceful.
Exxon:
- The supertanker Exxon Valdex spilled 11 Million gals of crude oil into Prince William Sound, AK on Mar 24, 1989 (cause determined to be negligence by a drunk Captain)
- This oil spill affected more than 1,300 miles of shoreline, killed 250,000 seabirds, 2,800 sea otters, and caused over $300 million of economic harm to more than 32 thousand people in local communities
- $5 billion in punitive damages was awarded initially by the Courts, a federal judge later reduced the punitive damages to $4.5 billion, and the appeals court further cut it to $2.5 billion
- Exxon settled initially in 1991 with funds to be disbursed in three discrete parts:
- criminal plea agreement ($25 million),
- criminal restitution ($100 million), and
- civil settlement ($900 million)
- total of $1.025 B
- However, further appeals were launched until finally on Jun 26, 2008, the Supreme Court reduced what had once been a $5 billion punitive damages award to about $500 million.
- On Dec 7, 2008 after nearly 20 years, victims of the Exxon Valdez finally began getting their payout, although about half of the people eligible for compensation had already died while waiting for their settlment, many from old age
- In the end, Exxon paid ~$500M for $300M in economic damages (plus lawyer fees)
Tesla:
- On Mar 31, 2018 Tesla share holders voted overwhelmingly in favor of a CEO Compensation Plan which, although audacious, would see their share values more than 10x if successful; if not successful the CEO gets ZERO (a literal win:win scenario)
- On Jan 30, 2024 the Chief Justice of the Chancery Court of Delaware issued an opinion that Tesla's Board of Directors had not been sufficiently clear that the CEO Elon Musk was also CHAIRMAN OF THE BOARD, and was in fact was the BROTHER of Kimbal Musk, one of the other Board Members who recused themselves from participating in the creation of, and voting for, the CEO Comp Plan
- Through this ruling, Judge Kathaleen McCormick ordered that Elon's Comp Plan be recinded, and granted the Plaintiff in the case standing to negotiate what Elon's pay should be, while ignoring the votes of the clear majority of TSLA shareholdes by labeling their votes uniformed, thereby shifting the burden of proof to the Defendant
- On March 01, 2024 the Plaintiff's law firm filed a request for compensation with the Court for 29 Million unrestricted shares of TSLA (including voting rights, and the ability to sell them immediately, which Elon DID NOT have the right to do for 5 years after the share options vested, according to the 2018 CEO Comp Plan
- If this plan is sanctioned by the Court, it will ensure that Elon Musk is the only stakeholder in TSLA who has not benefited from the 6 years of hard work he did to earn those share options.
- In the end, the shareholders who voted for this CEO Comp Plan saw their shares over 20x in value by Nov 2021, and Elon still has not been paid a cent
- Now, the Law firm who says that 'it wasn't worth paying Elon $56B' in stock options to increase Market Cap by $600B actually wants to be paid in TSLA STOCK.
- The Universe maximizes irony; apparently so does the Chancery Court of Delaware
Exxon paid $500M for destroying a fishery and affecting countless lives. Now this law firm wants to be awarded $5.9B worth of unrestricted TSLA stock so they can do some real damage to the enviroment (c.f. the Tesla Mission).
TL;dr Disgraceful.
Artful Dodger
"Neko no me"
During Thursday's "State of the Union" Address to a joint session of the U.S. Congress, President Biden twice referred to a "Billionaire's Tax". I wonder if it's similar in kind to this "wealth tax" proposed by Sen. (D) Warren of Massachusetts:
Eg: for 2023 Elon would have been taxed 2% * $50M + ( $248.48 * 411M * 6%) = $6.129 B
That's right folks: if Elon doesn't sell any, he'd still 'owe' over $6B every year to the US Treasury. This sale would, however, come out of the Company's Mkt Cap (at some multiple).
It's not clear if vested stock options would count towards "net worth", so the above "annual wealth tax" does not even include vested stock options (of which Elon holds ~304M, depending on the outcome of the Delaware rugpull).
But its certainly possible they could be included, if the execution price is known. Then the issue becomes if they weren't sold, do you count also the 53% which would be payed in income/payroll taxes for those potential shares as part of the net worth? ie: Is the "Wealth Tax" also a surtax?
What a quagmire. I don't think this sort of tax would fly, even in Maple Red Canada... but I do expect it to become a campaign issue... for potential Senate nominee (D) Judge Kathaleen McCormick.
FUN QUESTION: If Elon does have to pay an annual wealth tax on vested shares, and then those shares are yanked by an activist Judge 6 years later, does Elon get his 36% taxes back? Do SHAREHOLDERS get their SP back?
P.P.S. This is a poorly designed tax. More of a election stunt than a serious policy proposal.
"Households would pay an annual 2% tax on every dollar of net worth above $50 million and a 6% tax on every dollar of net worth above $1 billion. Because wealth is so concentrated, this small tax on roughly 75,000 households will bring in $3.75 trillion in revenue over a ten-year period."
Eg: for 2023 Elon would have been taxed 2% * $50M + ( $248.48 * 411M * 6%) = $6.129 B
That's right folks: if Elon doesn't sell any, he'd still 'owe' over $6B every year to the US Treasury. This sale would, however, come out of the Company's Mkt Cap (at some multiple).
It's not clear if vested stock options would count towards "net worth", so the above "annual wealth tax" does not even include vested stock options (of which Elon holds ~304M, depending on the outcome of the Delaware rugpull).
But its certainly possible they could be included, if the execution price is known. Then the issue becomes if they weren't sold, do you count also the 53% which would be payed in income/payroll taxes for those potential shares as part of the net worth? ie: Is the "Wealth Tax" also a surtax?
What a quagmire. I don't think this sort of tax would fly, even in Maple Red Canada... but I do expect it to become a campaign issue... for potential Senate nominee (D) Judge Kathaleen McCormick.
FUN QUESTION: If Elon does have to pay an annual wealth tax on vested shares, and then those shares are yanked by an activist Judge 6 years later, does Elon get his 36% taxes back? Do SHAREHOLDERS get their SP back?
P.P.S. This is a poorly designed tax. More of a election stunt than a serious policy proposal.
No he would not get his taxes back.
We have this stupid wealth tax in Norway.
Sigh.
Another issue with such a tax - if you start a company and its stock that gets wildly successful then you suddenly owe a large amount of taxes. This could well be before your company make any serious money. So you haven't got a large salary.
So the only way to pay this tax amount is to sell off shares. I belive Elon could end up here if the proposal become policy.
After many years of this you end up owning much less of your company. So surprisingly enough no Norwegians try to create startups that have the risk of being a huge success on the stock market before earning large profits. Ie Spotify is Swedish. Would have been ugly in Norway.
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Artful Dodger
"Neko no me"
If a founder/large shareholder of a U.S. publicly traded company had to sell 6% of their shares every year, that company would soon go to zero. Just look at what happened as short sellers piled into Elon's share sales in 2021 and 2022. It was a 100:1 drop in Mkt Cap vs the value of shares sold (even when half of those proceeds went to pay actual income tax).
Does China hava a "wealth tax"? I know they have billionaires. The U.S. is trying hard to rid itself of its capitalist pas, and its capitalists (and its capital). "Fair share", lol.
Cheers!
Tiger
Active Member
In other words, Elon went "do as I say, or I kill the company", and now investors are screwed either way.
If Elon leaves Tesla, he will likely bring his best people with him, which means that Tesla would likely struggle. Especially if competing with whatever different company Elon takes them to in order to keep working on AI and robots. FSD might not be finished, or might never be good enough.
Personally, I would want Elon to stay with Tesla, but on the other hand, seemingly threatening people to sink Tesla if he doesn't get his way doesn't sit well with me. And his excuse that he wants 25% so he won't have to worry about someone taking over the company... why did he sell tons of shares then?
Apparently those 25% in Tesla weren't very important to him when he started drooling over Twitter!
He dumped his shares, moved his ownership way down, and now he's complaining about a low ownership stake.
Sigh.
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