Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable

[Ellec]

Yes, I understand the judge's reasoning for the decision. But if it is indeed a violation of the law, the law doesn't make sense. Why does it matter how the negotiations proceeded? Shareholders didn't vote on the negotations, we voted on the END RESULT of the negotiation. How you get from A to B doesn't matter if everyone democratically voted on B.

A person holding a single share could propose that Tesla give $1M to each employee as a thank-you for their hard work. This obviously would be a horrible business decision and would bankrupt the company, but suppose all shareholders approve it. Does that mean the judge gets to strike it down because the person suggesting it was not looking out for the financial interests of the company?

I agree it seems wrong but the person bringing the case and their lawyers saw an opening in the law or something, it's up to Tesla/Elon to get lawyers on it and sort it out. Im not a lawyer so going to shut up now, would be good if someone who practices this kind of law gave their opinion.

 

[scaesare]

Great day for Tesla and TSLA! If this stops Elon from getting another comp package then we will be better off. He made his choice when he purchased the bird, selling TSLA and diverting engineers

Wow, 36 disagrees (100% of respondents)... impressive!

 

[Usain]

If anything the SP should be moving up if the dilution from the shares from Elon package are no longer on the table. However given there is likely to be an appeal and/or a new package it's still all up in the air.

Exactly my point. We don't really know if this is going to turn out good or bad. Uncertainty usually drives the SP lower. But it's doing just fine. I'm encouraged by this.

 

[Mardak]

I don't think the shareholders want TSLA removed from the S&P500

Why not? There are multiple indexes although S&P500 might be the most tracked. Yes, there was a lot of activity when TSLA was added for passive S&P500 index funds to match as well as subsequent activity of active funds deciding to match/under/over-weight the benchmark.

If part of the benefit of being added in the first place was more visibility and recognition, does that go away when one particular index has rules to exclude? Is it beneficial for shareholders to shift ownership towards active fund managers assuming these might choose to keep their holding?

 

[Krugerrand]

Wait... what 2012 compensation plan?

Hopefully people get over this yesterday already. So please, only post something informative, creative, or funny (not holding breath). The Delaware ruling would have come as no surprise to Tesla; let this play out and see. It will likely be swift, and it's outside of our control. The board probably all knew this outcome back when the 25% goal was proposed, and sooner. Perhaps this is even why the new package was introduced.

Personally, I'm so done with status quo (anything). The planet's on a train wreck X2 with the latest errors in Climate Sensitivity. Elon's compensation should be one of the last worries for humanity (and all current forms of Earth life for that matter).

I’m entitled to my moment of righteousness indignation just as those who think this was a fair/good judgment are entitled to be wrong.

I’m mad in a way I only get mad when someone, who has no business or right to do so, has taken away from me. In this case, I’ve had my shareholder vote taken away. I’ve had someone tell me I didn’t know what I was doing, that I didn’t have all the information. I’ve had someone decide for me, who wasn’t asked to decide for me.

Unlike so many people who walk through this world not taking responsibility for their actions, I do embrace my responsibility. Whether I was fully informed or not is first and foremost on me. I knew, tyvm, about the relationships. Those relationships are actually one of the reasons I voted yes.

Ok, I’m done. I will mark further righteousness indignation with disagrees.

 

[EVMeister]

Wow, 36 disagrees (100% of respondents)... impressive!

Maybe @ShareLofty was the shareholder who initiated the lawsuit.

 

[SOULPEDL]

Wall Street is not stupid. $55B "share buyback" opportunity will turn Tesla's balance sheet from a mere fortress into the US Navy.

And... the macro is down. Pressure cooker possibly.

 

[mongo]

I agree it seems wrong but the person bringing the case and their lawyers saw an opening in the law or something, it's up to Tesla/Elon to get lawyers on it and sort it out. Im not a lawyer so going to shut up now, would be good if someone who practices this kind of law gave their opinion.

They filed the suit the same day the plan was approved by voters...

Why not? There are multiple indexes although S&P500 might be the most tracked. Yes, there was a lot of activity when TSLA was added for passive S&P500 index funds to match as well as subsequent activity of active funds deciding to match/under/over-weight the benchmark.

If part of the benefit of being added in the first place was more visibility and recognition, does that go away when one particular index has rules to exclude? Is it beneficial for shareholders to shift ownership towards active fund managers assuming these might choose to keep their holding?

All the shares held in S&P 500 indexes would be sold off now. At some point in the future, some other fund migt buy some, but those funds aren't avoiding buying because TSLA is in the S&P 500, so there is no net acquisition.

 

[scaesare]

Maybe they were the shareholder who initiated the lawsuit.

Seems to me they's be more inclined to agree with @ShareLofty 's sentiment that "If this stops Elon from getting another comp package then we will be better off"...

 

[Usain]

I just don't understand why the board being friends/lovers/comrades/shipmates/countrymen/neighbors/brothers/spouses/whatever even matters. The shareholders voted to approve it. Nothing else should matter. If shareholders felt they weren't getting a good deal out of it, they would have voted against it.

I believe that part of the plaintiff's argument was that the board knew some of the milestones would be easy to hit. If that was the case then shareholders were voting without some critical inside information.

I might buy that argument. But the rest of the judge's decision seemed like nonsense to me. Like, "Elon has enough stock that he should be willing to work for free."

 

[Knightshade]

Yes, I understand the judge's reasoning for the decision. But if it is indeed a violation of the law, the law doesn't make sense. Why does it matter how the negotiations proceeded? Shareholders didn't vote on the negotations, we voted on the END RESULT of the negotiation. How you get from A to B doesn't matter if everyone democratically voted on B.

A person holding a single share could propose that Tesla give $1M to each employee as a thank-you for their hard work. This obviously would be a horrible business decision and would bankrupt the company, but suppose all shareholders approve it. Does that mean the judge gets to strike it down because the person suggesting it was not looking out for the financial interests of the company?

A single-share, not-company-executive, shareholder has no fiduciary responsibility to Tesla, so what they propose or negotiate isn't bound by that.

Board members DO have one.

The judge found those board members were acting largely as friends to Elon rather than out of fiduciary responsibility to negotiate the best deal for Tesla.

But that alone wouldn't have been enough for the ruling... regarding the vote issue- they found "the proxy statement inaccurately described key directors as independent and misleadingly omitted details about the process."

So what everyone voted on was based on inaccurate or incomplete disclosure of the issues back at the board level.

it's the COMBO of those two that led to the ruling.

 

[2daMoon]

Wow, 36 disagrees (100% of respondents)... impressive!

Some people just have a knack for achievement!
They certainly do dish a lot of them out. Perhaps it is a boomerang effect?

Watch below for an example

 

[scaesare]

It’s soooooo cool that he makes these huge decisions based on polls from people who mostly have no idea about anything at all. Really love it.

What you seem to be missing is that Elon doesn't present two options, within one being drastically inferior, and then let the coin-flip of a public poll decide.

Instead, he presents viable options (each with pros and cons obvioulsy), and takes in to account the general consensus. And he's not afraid to change course if circumstances dictate. It's a public company, does it not seem reasonable for a CEO to gauge what the public thinks?

 

[bpjod]

I believe that part of the plaintiff's argument was that the board knew some of the milestones would be easy to hit. If that was the case then shareholders were voting without some critical inside information.

Maybe so, but should ALL compensation plans rely on impossible to achieve goals? If not, why should Elon's?

 

[NicoV]

From tomorrow on we will see how Tesla did in the EU market in januari. The 6 real time reporting countries are currently at 4992 registrations, up almost 25% from the previous record of first month of the quarter: 4020 registrations in Q4 2023.
Not bad for the first month without guidance.

 

[Mardak]

All the shares held in S&P 500 indexes would be sold off now

Is that a bad thing for long-term shareholders who in aggregate will have relatively more voting power with the reduction of passive funds?

 

[mongo]

But that alone wouldn't have been enough for the ruling... regarding the vote issue- they found "the proxy statement inaccurately described key directors as independent and misleadingly omitted details about the process."

That "sounds" logical, but is a steaming pile of rejected sausage.
"Independent director" and "Independent board" only signifies the person is not an employee (likely executive level) of Tesla. It does not mean fully and totally unconnected.

"Currently, the Compensation Committee consists of four members of our Board: Brad Buss, Robyn Denholm, Ira Ehrenpreis and Antonio Gracias, none of whom is an executive officer of Tesla, and each of whom qualifies as (i) an “independent director” under the NASDAQ Stock Market Rules and (ii) an “outside director” under CodeSection 162(m).
"
Full rules:

Nasdaq Listing Center
5605. Board of Directors and Committees
(a) Definitions
(1) "Executive Officer" means those officers covered in Rule 16a-1(f) under the Act.
(2) "Independent Director" means a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. For purposes of this rule, "Family Member" means a person's spouse, parents, children, siblings, mothers and fathers-in-law, sons and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares such person's home. The following persons shall not be considered independent:
(A) a director who is, or at any time during the past three years was, employed by the Company;
(B) a director who accepted or who has a Family Member who accepted any compensation from the Company in excess of $120,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than the following:
(i) compensation for board or board committee service;
(ii) compensation paid to a Family Member who is an employee (other than an Executive Officer) of the Company; or
(iii) benefits under a tax-qualified retirement plan, or non-discretionary compensation.
Provided, however, that in addition to the requirements contained in this paragraph (B), audit committee members are also subject to additional, more stringent requirements under Rule 5605(c)(2).
(C) a director who is a Family Member of an individual who is, or at any time during the past three years was, employed by the Company as an Executive Officer;
(D) a director who is, or has a Family Member who is, a partner in, or a controlling Shareholder or an Executive Officer of, any organization to which the Company made, or from which the Company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient's consolidated gross revenues for that year, or $200,000, whichever is more, other than the following:
(i) payments arising solely from investments in the Company's securities; or
(ii) payments under non-discretionary charitable contribution matching programs.
(E) a director of the Company who is, or has a Family Member who is, employed as an Executive Officer of another entity where at any time during the past three years any of the Executive Officers of the Company serve on the compensation committee of such other entity; or
(F) a director who is, or has a Family Member who is, a current partner of the Company's outside auditor, or was a partner or employee of the Company's outside auditor who worked on the Company's audit at any time during any of the past three years.
(G) in the case of an investment company, in lieu of paragraphs (A)-(F), a director who is an "interested person" of the Company as defined in Section 2(a)(19) of the Investment Company Act of 1940, other than in his or her capacity as a member of the board of directors or any board committee.
Amended Feb. 13, 2020 (SR-NASDAQ-2019-049).

Whereas the outside consultant was:

Throughout this process, the Board used the services of Compensia, which served as its independent compensation consultant, and Wilson Sonsini Goodrich & Rosati, P.C. (“WSGR”), which served as its special outside counsel.

The process:
"At various points during this process, the independent members of the Board met with Mr. Musk to share their thinking on the award and get his perspective, including as to each of the issues identified above and ultimately to negotiate the terms of the award with him."

 

[mongo]

Is that a bad thing for long-term shareholders who in aggregate will have relatively more voting power with the reduction of passive funds?

If being added to the 500 was good, being removed must be not good.
Would the S&P shares be purchased by long term or short term buyers? Voting only matters if a majority is acting against the interests of long term shareholders. Are passive funds who vote the board's recommendation a problem?

 

[H Mak]

Has anyone got to the bottom of who's really behind the 9 share no-mark?

 

[Musskiah]

This was the same judge that ruled Elon to purchase X after he discovered their user numbers were grossly misrepresented because of the number of bots. Judge McCormick must be Elon's favorite human right now.