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Tesla, TSLA & the Investment World: the Perpetual Investors' Roundtable
- Thread starter AudubonB
- Start date
powertoold
Active Member
I'm reading the 200-page thing, and it seems there was some back and forth, disagreements about the structure of the tranches, took several months, etc.
Whatever the reason, Musk hit the brakes on the process. On June 30, two
days before the planned Compensation Committee meeting, Musk sent Maron a brief
email asking to put the discussion of his compensation “on hold for a few weeks[.]”
Maron replied that he would “rather keep cranking on it . . . because there’s a fair
amount to it that we’ve been working on with the board and there’s lead time
involved.” Musk agreed to let Maron proceed, stating that he “[j]ust want[ed] to
make sure Tesla interests come first.” Musk reminded Maron that “[t]he added
comp is just so that I can put as much as possible towards minimizing existential risk
by putting the money towards Mars if I am successful in leading Tesla to be one of
the world’s most valuable companies. This is kinda crazy, but it is true.”
Although Musk agreed to allow Maron to “keep cranking,” progress on Musk’s
compensation plan had slowed to a halt. From August through September, there
was some discussion of Musk’s compensation plan but no action, and there were no
meaningful discussions of the 2018 Grant in October.
This lawsuit came a while back. Before Elon got, um, intereSSting. Also pretty sure it's not because of the guy who signed the bill that essentially delivers dump trucks full of cash to Tesla every day.
Oddly similar to what my wife said to me when she found a new boyfriend. I don't get it.
We had the plan, we voted the plan. If people voted the board instead, that's their prerogative.
Artful Dodger
"Neko no me"
Elon Musk on X: "I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters" /X (9 min ago)
Musk and Tesla knew the outcome since 2022... Twitter became X and was moved from inc in Delaware to Nevada
Lawsuit in 2018, five day trial, trial in November 2022, 2 months later judges decision, 2 year delay before publishing opinion.
IMHO This is an activist judge and a punitive process. The "good guys".
"Swept up by the rhetoric of 'all upside,' or perhaps starry eyed by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?" wrote Kathaleen McCormick of Delaware's Court of Chancery.
The concept of fairness calls for a holistic analysis that takes into considerationtwo basic issues: process and price. The process leading to the approval of Musk’scompensation plan was deeply flawed. Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf.
Ehrenpreis testified that he did not view the negotiation as an adversarial process. He said: “We were not on different sides of things.
The defendants also point to the duration of the process (nine months) and thenumber of board and committee meetings (ten) as evidence that the process wasthorough and extensive. The defendants’ statistics, however, elide the lack of substantive work. Time spent only matters when well spent.
Defendants argue that rescission is a harsh consequence that would leaveMusk uncompensated. But Musk’s preexisting equity stake provided him tens ofbillions of dollars for his efforts. And Defendants have not offered a viable alternativeshort of leaving the Grant intact. (HE GOT PAID BECAUSE HE ALREADY HAD SHARES THAT INCREASED IN VALUE)
....
Timeline
"Good day for the good guys," said an email from Greg Varallo, an attorney for the Tesla shareholder Richard Tornetta who brought the lawsuit in 2018.
The Delaware trial, which involved a shareholder's challenge to Elon Musk's $55 billion compensation package from Tesla, took place in November 2022. The trial lasted for five days, and it took approximately two months for the judge to reach a decision. On January 30, 2024, the judge ruled in favor of the plaintiff, finding that Musk's compensation package was subject to review under the entire fairness standard. This decision means that the defendants, Tesla's directors, must prove that the compensation plan was fair. However, they failed to meet this burden, and as a result, judgment was entered for the plaintiff.
The ruling can be appealed to the Delaware Supreme Court.
Lawsuit in 2018, five day trial, trial in November 2022, 2 months later judges decision, 2 year delay before publishing opinion.
IMHO This is an activist judge and a punitive process. The "good guys".
"Swept up by the rhetoric of 'all upside,' or perhaps starry eyed by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?" wrote Kathaleen McCormick of Delaware's Court of Chancery.
The concept of fairness calls for a holistic analysis that takes into considerationtwo basic issues: process and price. The process leading to the approval of Musk’scompensation plan was deeply flawed. Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf.
Ehrenpreis testified that he did not view the negotiation as an adversarial process. He said: “We were not on different sides of things.
The defendants also point to the duration of the process (nine months) and thenumber of board and committee meetings (ten) as evidence that the process wasthorough and extensive. The defendants’ statistics, however, elide the lack of substantive work. Time spent only matters when well spent.
Defendants argue that rescission is a harsh consequence that would leaveMusk uncompensated. But Musk’s preexisting equity stake provided him tens ofbillions of dollars for his efforts. And Defendants have not offered a viable alternativeshort of leaving the Grant intact. (HE GOT PAID BECAUSE HE ALREADY HAD SHARES THAT INCREASED IN VALUE)
....
Timeline
"Good day for the good guys," said an email from Greg Varallo, an attorney for the Tesla shareholder Richard Tornetta who brought the lawsuit in 2018.
The Delaware trial, which involved a shareholder's challenge to Elon Musk's $55 billion compensation package from Tesla, took place in November 2022. The trial lasted for five days, and it took approximately two months for the judge to reach a decision. On January 30, 2024, the judge ruled in favor of the plaintiff, finding that Musk's compensation package was subject to review under the entire fairness standard. This decision means that the defendants, Tesla's directors, must prove that the compensation plan was fair. However, they failed to meet this burden, and as a result, judgment was entered for the plaintiff.
The ruling can be appealed to the Delaware Supreme Court.
powertoold
Active Member
Huh? Isn't that for the stockholders to decide? This whole thing is so subjective.
The only objective thing is that shareholders saw the plan in full and voted 70%+ in favor.
Would leaving Delaware change the restrictions on changing the voting structure post-IPO?
Artful Dodger
"Neko no me"
Delaware law, "seeking to protect minority investors" especially "investors" with 9 shares and enough money to sue in Delaware court.
I want the Chancery Court to provide complete transparency on how it reached its decision, not just the 200 page decision. I don't have sufficient information to their decision making process.
I also want the Chancery Court to prove that no short sellers were given advance notice of this decision.
Finally, I want Chancery Court to prove that they have not damaged TSLA investors, after the fact, by undue influence by short sellers, or in any future event, knowable or unknowable. Because that's the standard the applied here.
Carl Raymond
Active Member
It’s fair only because it’s Musk and he’ll use it to fund Mars, a massive boost for science and engineering on Earth and potentially a backup for humankind.
Anybody else and it’s super yacht money, entirely unfair.
Zero chance the judge will understand this.
Stretch2727
Engineer and Car Nut
I agree....and Elon and his Brother did not vote their shares.
I just find it hard to believe one judge can strike down a contract between a CEO, Board and shareholders where everyone agreed!
It will be interesting what are the next steps...not sure how hard it is to move a corporation but this maybe faster than waiting and taking a chance on appeal. I don't think they can just redo or offer a larger package which then could be subject to the same litigation.
EVNow
Well-Known Member
Yes, the Canada one, right ?
I don't think so. I believe that's a stock market thing, not Delaware.
EVNow
Well-Known Member
LOL. Now it’s Delaware’s fault ? But it was great when trying to avoid some taxes …
BTW, I think Musk and the board probably anticipated a loss and already have some backup plans. Probably another compensation package - this time properly structured and thoroughly vetted.
Considering that people on this thread and elsewhere are constantly changing their position based on the situation, why shouldn’t Elon and Tesla do the same?
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