And did people forget why the Judge ruled the way they did?
Because the Board misrepresented itself as independent, and the "stratospheric milestones" were internally pretty likely outcomes. This was not information given to shareholders when they voted. You don't get to steal $100, go to the casino, win $100, and then return the original $100 and say the initial theft wasn't an issue because it all worked out.
Nice thing here is that Tesla can just go back to the shareholders, and if they're all still so happy with how well Elon is running Tesla, it should be no challenge to get them to re-affirm that deal, right? Elon has clearly proven himself worthy of creating and managing long term value for Tesla? All that growth between March 2020 and November 2020 was all because of his amazing leadership? (reminder that TSLA jumped 8X in those 8 months and is back to that Nov 2020 price). Elon's not at all nervous that his behavior in the last 6 years is making shareholders question if his juice is worth the squeeze, is it?
But outside of all of that, the brain dead news bite of "As sales slump. Elon lays off 20% of Tesla, including all of charging team while also asking for re-affirmation of the largest CEO pay package in history by 20X and is bigger than all of Tesla's profits ever" just doesn't look good for Tesla in the public eye at all, and it's something a forward thinking CEO could easily avoid.
As another put it, this compensation was decided years ago. The amount only is valued so high now because Elon
did deliver stratospheric stockholder value. In context, by the end of 2018 (the year the compensation package was decided) the stock price was only $22.19. Market cap was only around $55 billion. I don't think anyone at the time felt it would be "likely" for Tesla to be worth
10x that. Elon would only earn the full value base on achieving $50 billion market cap increments, up to $650 billion. He achieved that and more.
Basically the argument back then was the compensation was directly tied to how much shareholder value he delivered. Even at $55B at current prices, out of the $595B shareholder value he delivered, that is only 9.24% of the value he delivered.
It's just that the lawsuit timing is bad right now, and the value dropped in recent years (although even at current market cap is still ~$580B, so only a bit below the original max target), so shareholders are not happy.
Except as you say, it does dilute the shareholders, and the only reason quarterly profits matter is that shareholders care. So why does any logical shareholder care about quarterly profits but not about shareholder dilution? The impact to them is identical. $55B of dilution is equal to 9 years of Tesla profits. And the whole "but Elon has to BUY the shares!" Yeah, at $26 a share for something worth $186 a share, so you're right, it only costs Tesla shareholders $47B in dilution, not $55B. So cheap!
Another possibility is that Tesla goes and dilutes the shareholders by creating more stock and selling it, and using that to keep payroll going for 4 MORE YEARS.
Yes, the overall economics are complicated, but the fact that a CEO is arguing they are individually worth 4 years of pay for every single person at a 100K person company, of 66% of annual revenue, while in the midst of shrinking revenue and 20% layoffs, does not sound like someone that is really considering the best for the company. It sounds like someone trying to bleed a company on the way out.
And sometimes it's nothing more than the optics. Elon calling teams bloated and firing them to "make a point" while asking to be the highest paid CEO in history is peak dissonance.
It's not $55 billion of dilution. His options only affect the market if he exercises it and then starts selling stock on the market (and the actual monetary value varies based on stock price at the time, it's not a fixed number like $55B). But he has no reason to do so given he get more value out of it by keeping it, trying to increase the stock price, and borrowing money on the value of shares. That's what he has been doing even for his previous options.
As such shareholders care a lot less about the stock options, than say profit margin, which directly impacts the future of the company (and thus stock price).
The worry about not giving him the promised compensation is he doesn't have an incentive to push the company to the next level as CEO, or maybe he even divests his current shares (which may tank the stock). Of course if you are of the opinion he shouldn't be running the company, then you don't care about that.
Of course this is a bad time to be having a lawsuit on it, given the stock has dropped since last year and the recent quarter performance was relatively bad.
