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

[Krugerrand]

I have only a hunch why he sued, no factual reason though. That said, you are likely correct.

It makes zero logical sense for a holder of 9 shares to do such a thing. So, the guy can admit to being legally insane or bought and paid for.

 

[Artful Dodger]

This is akin to some judge in China ruling that the GF must be torn down because the paperwork reported 20 toilets when there were 200 in reality, causing one neighbor's toilet to overflow

Lol! Zounds bitter in the OG (original german)...

 

[Artful Dodger]

I've no idea. He's an ex-drummer from some minor heavy metal band, no idea why he sued in the first place with only nine shares to his name.

... and was his name Trevor Slattery? /x

 

[Captkerosene]

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.

It's fair because the world's best CEO is worth what we paid ... and more. None of our business what he wants to do with it.

 

[Musskiah]

Who cares. It should be called the ‘woke’. What a missed opportunity; in 2024 no less.

It’s an obvious mix between a wheel and a yoke…and we went with squircle? I’m so disappointed!

Slow clap

 

[ShareLofty]

But how could the Tesla board assure that some random future Delaware judge doesn't void it down the road?

How about we get an independent board and we don’t have to worry about it. Elon created this problem when he stacked the board with relatives and friends

 

[Tronguy]

I've read through the court document. And it can be summarized thus:

1. Musk controls the company. That's easy, he really does.
2. As such, he has a fiduciary responsibility to all shareholders, especially including ones who aren't him or his close confederates.
3. Fiduciary responsibility means that somebody/somebodies represent the shareholders interests. And, according to the judge, these interests are only corporate value and share value. Nothing Else.
4. It's noted that Elon is trying to save the world: Seriously worried about AI taking over and destroying humanity. For that reason, he's trying to put (my words) a lifeboat and permanent settlement on Mars. Elon's not joking. Settling on Mars is expensive. Looks like Elon's convinced the board of all this. So, the board/Elon is putting serious money in Elon's pocket to fund the trip to Mars.
5. The Judge's reaction to this: NOPE, NOPE, NOPE: Delaware Law Says Tesla company value and interests. Period.
6. So, Elon's pay since the 2018 agreement is rescinded. That money for Mars? Not in the equation. The Judge's comment on pay issues: He's got Lots of Stock, if the Stock Goes Up In Value, Elon Gets More Money. That's all he's going to get.

It's not particularly wrong of the judge to rule this way: He's following the law, that's his job.

As a final side note: This could all be "cured" by having comparisons with the size of other companies and the pay that their CEO's get. That, of course, would Reduce Elon's Pay, A Lot. And it does miss the point: Tesla is growing at the astounding rate that it is by Elon's managerial prowess, which is Truly Other.

The Law doesn't know about or recognize Truly Other CEO types, and so wants to bring everything down to some much smaller level.

Heh. On the trip to Mars front: What's it worth to a citizen of the Earth to have a bolt hole if the advent of true AI turns everything pear-shaped? In which case, shareholders would be wildly enthusiastic about showering Musk & Co. with money now to stave off extinction later. But that's not how the law is written.

 

[Musskiah]

This is the move?

 

[Stretch2727]

Elon draws no salary. These options were his only compensation for his performance from 2018 - 2023.
If we vote no, we are basically telling the CEO he works for free.
We approve it because it is the right thing to do.

A few questions.

1. If this is not resolved quickly will there be a restatement of earnings or an adjustment to Q1 earnings to resolve?
2. Could a package even be structured today given the change in stock price that does not cause a complete adjustment to past earnings? I am assuming any option value awarded now would be much higher value today than prior.

My guess is this is going to be a complete mess for the accounting/finance guys.

 

[AudubonB]

In distant years past I spent large sums of money trying to disprove your thesis, to my dismay.

As an avid listener to classic and baroque music, not so much so for Tchaikovsky's cannon-filled epic, that 'sealed volume variable transducer' never was attractive to me. Luckily for me, in my pocketbook anyway, is that my advanced age has dampened my auditory senses. Now I'm happy enough with Sonos and my AirPods.

For all of us though, Tesla could and should make some serious inroads to improving our vehicular silence, so we can at least hear the frequencies that that unsuitable environment might afford us. Nobody has really done that well without huge weight penalties. Tesla's recent use of dual pane windows helps, and recent tire innovations including the new Goodyear are helping. we really need some serious innovation.

Your second paragraph is a less rude way of my response to @mongo, which is "A teeth-thumping bass emanating five cars over is not music"

 

[evermore]

I've read through the court document. And it can be summarized thus:

1. Musk controls the company. That's easy, he really does.
2. As such, he has a fiduciary responsibility to all shareholders, especially including ones who aren't him or his close confederates.
3. Fiduciary responsibility means that somebody/somebodies represent the shareholders interests. And, according to the judge, these interests are only corporate value and share value. Nothing Else.
4. It's noted that Elon is trying to save the world: Seriously worried about AI taking over and destroying humanity. For that reason, he's trying to put (my words) a lifeboat and permanent settlement on Mars. Elon's not joking. Settling on Mars is expensive. Looks like Elon's convinced the board of all this. So, the board/Elon is putting serious money in Elon's pocket to fund the trip to Mars.
5. The Judge's reaction to this: NOPE, NOPE, NOPE: Delaware Law Says Tesla company value and interests. Period.
6. So, Elon's pay since the 2018 agreement is rescinded. That money for Mars? Not in the equation. The Judge's comment on pay issues: He's got Lots of Stock, if the Stock Goes Up In Value, Elon Gets More Money. That's all he's going to get.

It's not particularly wrong of the judge to rule this way: He's following the law, that's his job.

As a final side note: This could all be "cured" by having comparisons with the size of other companies and the pay that their CEO's get. That, of course, would Reduce Elon's Pay, A Lot. And it does miss the point: Tesla is growing at the astounding rate that it is by Elon's managerial prowess, which is Truly Other.

The Law doesn't know about or recognize Truly Other CEO types, and so wants to bring everything down to some much smaller level.

Heh. On the trip to Mars front: What's it worth to a citizen of the Earth to have a bolt hole if the advent of true AI turns everything pear-shaped? In which case, shareholders would be wildly enthusiastic about showering Musk & Co. with money now to stave off extinction later. But that's not how the law is written.

Elon gave up on mars and is fighting new battles instead. But none of what Elon does with his money is our purview anyway.

 

[⚡️ELECTROMAN⚡️]

Does this mean Elon isn't the second richest person in the world anymore?

 

[Thekiwi]

How about we get an independent board and we don’t have to worry about it. Elon created this problem when he stacked the board with relatives and friends

This highlights the current problem - how does the tesla board as currently constituted present another CEO comp plan that wont be struck down in another future lawsuit? At the very least they will need a different compensation committee, and perhaps add more independent directors (who are actually independent with no strong personal relationship or business history with Elon).

Remember it wasn’t the size or design of the comp plan that was the heart of the court case, but the people on the board who oversaw it and how they did / did not perform their roles in a sufficient manner.

 

[Thekiwi]

A few questions.

1. If this is not resolved quickly will there be a restatement of earnings or an adjustment to Q1 earnings to resolve?
2. Could a package even be structured today given the change in stock price that does not cause a complete adjustment to past earnings? I am assuming any option value awarded now would be much higher value today than prior.

My guess is this is going to be a complete mess for the accounting/finance guys.

if the ruling stands, EPS estimates will be revised significantly higher for future quarters (purely from the reduction in diluted share count).

 

[powertoold]

We can't hold the vote again because the tranches have already been achieved

 

[bpjod]

I've read through the court document. And it can be summarized thus:

1. Musk controls the company. That's easy, he really does.
2. As such, he has a fiduciary responsibility to all shareholders, especially including ones who aren't him or his close confederates.
3. Fiduciary responsibility means that somebody/somebodies represent the shareholders interests. And, according to the judge, these interests are only corporate value and share value. Nothing Else.
4. It's noted that Elon is trying to save the world: Seriously worried about AI taking over and destroying humanity. For that reason, he's trying to put (my words) a lifeboat and permanent settlement on Mars. Elon's not joking. Settling on Mars is expensive. Looks like Elon's convinced the board of all this. So, the board/Elon is putting serious money in Elon's pocket to fund the trip to Mars.
5. The Judge's reaction to this: NOPE, NOPE, NOPE: Delaware Law Says Tesla company value and interests. Period.
6. So, Elon's pay since the 2018 agreement is rescinded. That money for Mars? Not in the equation. The Judge's comment on pay issues: He's got Lots of Stock, if the Stock Goes Up In Value, Elon Gets More Money. That's all he's going to get.

It's not particularly wrong of the judge to rule this way: He's following the law, that's his job.

As a final side note: This could all be "cured" by having comparisons with the size of other companies and the pay that their CEO's get. That, of course, would Reduce Elon's Pay, A Lot. And it does miss the point: Tesla is growing at the astounding rate that it is by Elon's managerial prowess, which is Truly Other.

The Law doesn't know about or recognize Truly Other CEO types, and so wants to bring everything down to some much smaller level.

Heh. On the trip to Mars front: What's it worth to a citizen of the Earth to have a bolt hole if the advent of true AI turns everything pear-shaped? In which case, shareholders would be wildly enthusiastic about showering Musk & Co. with money now to stave off extinction later. But that's not how the law is written.

Thank you for your summary.

I fail to see how this package didn't represent the shareholder's interests. My wife's and my gains from my $TSLA holdings that I had at the time I voted *FOR* his compensation package far exceed all the monies the two of us have earned in 40 years (each) of working and both of us have had very good salaries for 30+ years. Also they far exceed the gains from any other company's stocks we've owned over the years. Seems to me he's fulfilling his feduciary duties just fine, Your Honor.

Why on Earth (pun fully intended) does it matter what he wants to spend his money on? Would it have been okay with the judge if it were hookers 'n blow on a private yacht, because that's more in line with the stereotypical CEO of a company registered in Delaware (at least according to my learnings from Reddit). Furthermore, I've never heard of a compensation package that was MORE ALIGNED with growing value for the company and shareholders than this one. Not one penny of salary. 100% aligned with growing the company. Can anyone point out one more aligned with company growth than Elon's to me because I'm genuinely curious.

Anyone? Anyone?
Bueller? Bueller? Bueller...

 

[Dutchie]

Let’s start with ‘it’s the right thing to do.’

Elon draws no salary. These options were his only compensation for his performance from 2018 - 2023.
If we vote no, we are basically telling the CEO he works for free.
We approve it because it is the right thing to do.

Sure, I understand it is the right thing to do for us long time shareholders but:

- try to convince the guy who put his savings in TSLA at $380 a couple of years ago that it is the right thing to do…
- try telling that to a fund manager from for instance Fidelity, who might get sued by buyers of his funds if he approves it, that it is the right thing to do…

It is great that we propose a new vote but it would not be a foregone conclusion that it would pass.

 

[MrMoo]

Sure, I understand it is the right thing to do for us long time shareholders but:

- try to convince the guy who put his savings in TSLA at $380 a couple of years ago that it is the right thing to do…
- try telling that to a fund manager from for instance Fidelity, who might get sued by buyers of his funds if he approves it, that it is the right thing to do…

It is great that we propose a new vote but it would not be a foregone conclusion that it would pass.

Agreed

 

[Musskiah]

The board comes under scrutiny and the future of Ira Ehrenpreis is most uncertain.

 

[Drumheller]

Why would we want to approve his package now? All the achievements have been met already. What’s in it for us to approve his compensation package at this stage. Just playing devils advocate here.

Integrity