Elon Musk Is Overpaid
bloomberg.com
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The comp plan was presented as created by an independent board, when the truth was the directors had a direct conflict of interest that they did not disclose to the shareholders.
And that under Delaware law makes it a no-no and allows shareholders to sue, which they did. They were "mislead." Had they been more transparent, they could have given Musk triple the comp package and everything would have been above board.
The issue at the end of the day is transparency to shareholders, not the $ amount, or whether he did or did not earn it.
Why would an executive want to work at a company if after he achieves amazing results, his compensation can Ben clawed back, due to a missing one sentence disclaimer on a proxy statement?
Also, nobody serious is talking about moving companies out of Delaware. Elon is tweeting about it.
Again the issue isn't compensation and whether it was too much, it's that the shareholders were mislead. If the board had disclosed they had a conflict of interest, and the shareholders still voted for the package (which I believe they still would have), it would be a moot point, but they did not. They didn't follow the rules, and that has consequences.
Laws and contracts aren't worth the paper they're written on if they're not enforced, and failure to follow the law, which they were all aware of, has consequences.
I sold some of those TSLA shares and moved them into NVDA last year and I have zero expectation that the NVDA BoD is 100% free of undisclosed conflicts of interest.
If the Delaware court system does not care about my expectations, fine, but they shouldn't claim to be helping me.
At least one person assumed it was independent, and that person sued. But if everyone knew about how conflicted the board is, how come the proxy went to such great lengths to refer to the board as "independent"?
The Proxy failed to disclose any of the Compensation Committee members’ actual or potential conflicts with respect to Musk.747 In fact, the Proxy repeatedly described the members of the Compensation Committee as independent, stating: “The[] [Grant] discussions first took place among the members of the Compensation Committee . . . all of whom are independent directors;”748 and “[t]he independent members of the Board, led by the members of the Compensation Committee, spent more than six months designing [the Grant].”749 The Proxy’s introductory letter is “[f]rom the Independent Members of Tesla’s Board of Directors,” and the first four signatories are Compensation Committee members Gracias, Ehrenpreis, Denholm, and Buss.750 Notably, Gracias signed as “Lead Independent Director.”751
The description of the Compensation Committee members as “independent” was decidedly untrue as to Gracias and proved untrue as to the remaining committee members. At a minimum, Musk’s relationships with Ehrenpreis and Gracias gave rise to potential conflicts that should have been disclosed.752 Ultimately, all of the directors acted under a controlled mindset, calling into question the disclosure as to each of them.
Overall, Defendants failed to prove that the information about conflicts was adequately disclosed. The Proxy was materially deficient on this point.
> I have zero expectation that the NVDA BoD is 100% free of undisclosed conflicts of interest.
It's not about mere "undisclosed conflicts", it's that the compensation committee was so conflicted that it was effectively controlled by Musk.
That's the rule of law for you! Nine shares have as many fundamental rights as nine billion.
This is why the cost of capital for Delaware companies is lower than others'; it rules out entire categories of screwing around. Here's the good news: nobody is saying Musk can't get $55bn. It's saying he can't get it while pretending he isn't a controlling shareholder. The best thing to do might not be appealing, but putting the package to a new vote and moving on.
Realistically, if a jurisdiction allowed the blatant ripping off of shareholders, companies in that jurisdiction wouldn't be seen as investable, so most jurisdictions will avoid that. Would you invest in a company which has just moved out of Delaware for the purposes of avoiding the high quality of shareholder protection offered by Delaware? Like, that seems like asking for trouble.
> due to a missing one sentence disclaimer on a proxy statement?
That wasn't the case here.
Knowing that Biden dislikes Musk, maybe this is how the Democrats are going after him?
/s
For example: Landlords who now own all the land thus control the supply and also inflate demand by reducing supply.
Source: https://www.jchs.harvard.edu/sites/default/files/reports/fil...
Having said that, I sympathize with arguments to nudge things toward more just/equal outcomes recognizing supply&demand can be quite inhumane - after all it's a mechanism, not a goal in itself. Some UBI etc. could be an efficient way to help.
Having said that, western world spends huge amounts of money on public education for everyone, and after all that lots of people can't do anything fancier than tiding up a garden. It's a huge waste of resources. Future manual labor workers could start working after quick and efficient elementary schools, and start building wealth sooner to offset their lower productivity. But boy, no one is going to have conversations like that.
On all sides of all debates there's just bunch of irrational people trying to tweak a system that is too complex for them to understand.
You are much closer to these lower paid jobs than you realize.
Strange logic.
And even if, start changing from the top not the bottom or the middle
I'll work for a week as a landscaper.
The landscaper will work for a week as a software engineer.
Who do you think will fare better at getting close to a decent job well done?
Of course people who sit all day like many engineers will have problems doing manual labor. The problem is a good amount of them have enough experience with their hands to be a landscaper on demand. You will not find any but the most Einstein level landscapers able to immediately do productive software engineer work.
The % of people able to do it is much lower in software engineering and that reflects its compensation compared to landscaping.
G for Governance covers this.
> What happened when the rating agencies looked at Tesla? Tesla has faced accusations of racism and poor working conditions, especially in the California plant. They looked at executive pay, they looked at their internal controls. And Tesla historically, has faced, you know, a lot of governance issues.
Simply say that he now does not have enough control over Tesla, so it doesn't make sense for him to keep running it. But guess what? SpaceX is doing pretty well, so if Musk was 100% committed to SpaceX(and 100% committed to X, so 200% committed in total,) he could build a new Tesla from SpaceX.
Instead of promises of Tsla robots folding clothes he could now promise SpaceX robots mining asteroids.
Anyways.
Am I close?
Granted I don't follow his every move so I'm out of the loop, but what objectively awful things has he done? I have plenty of opinions about many people, but none to the point we see some people hate Musk.
Edit: instead of downvoting, argue your points cowards.
1. “He admitted to his biographer that the reason the Hyperloop was announced—even though he had no intention of pursuing it—was to try to disrupt the California high-speed rail project”. (In hindsight Hyperloop looks like a sick joke.)
2. Buying SolarCity to save first-cousin, at loss to Tesla shareholder value and broken commitments to solar customers. Staged it as value-added move.
3. Taking-Tesla-Private impulsive outburst. Turned out to be untrue, billions in shareholder value lost overnight.
4. Full Self Driving ten years of promises and customers who prepaid not refunded.
5. Outright malice to innocents who challenged his ego. See British explorer pedo comment and trashing of that guy.
6. His son/his dad
7. Battery capacity hyping
More…
The pattern has to do with integrity and character as an example for such a wealthy and revered person.
1. I did a search and looked into this, and it seems like a bad faith misrepresentation of what he said in his biography. I don't have a copy and am not going to invest too much time into a HN comment, but that's my take.
2: I need more knowledge on this to get a real opinion. Solar was all the rage and I'm not against companies investing laterally, even if there's nepotism. I would be more likely to invest in my friends than random people. CEOs make bad investments all the time, but I don't know enough to have an opinion if it was.
3. I didn't find anything about billions lost, only "Trading in Tesla shares was halted for more than 90 minutes, before resuming around 3:45 pm ET. They finished the day up 11 percent.", do you have more info? Who lost billions? Love the 420 reference, and he makes sound points. Being public is not always in the companies best interest. If he would have bought the shares above market price wouldn't that have been a fair deal?
4, 7. Show me more examples of optimistic estimates who get the same hate as Musk. Facebook/Meta for example, is Zuckerberg hated for the Metaverse not working out? No only ridiculed. In my book people are allowed to be wrong. He had better self-driving and more capacity than any competitor, you're just nit-picking for the sake of it.
5. Well, childish yes, but so was asking him to shove his sub up his ass. Don't start a fight you don't want to be involved in. Musk is eccentric and the response is in character, the fuck did he expect?
6. Elaborate, what about his son and dad?
Musk is an eccentric troll and people used to love him for it. The hate only started as soon as he endorsed Trump and bought Twitter. To me he's exactly the same Musk as always, in many ways I can relate. I don't have his fuck you capital but I also don't care what people think and can enjoy seeing people get pissed over bullshit reasons.
I don't think he's a bad person or does "awful things". Many times he makes total sense and has the balls to say what others should've years ago. That makes him dangerous to many people and they will find any means to take him down. That's how I see things, but I don't see people who disagree with me as evil.
(This is a common form of broken thinking for cults in general; the cultist is so convinced of The Truth that they assume that non-cultists must only be resisting The Truth for a specific reason, not realising that to non-cultists The Truth is just fundamentally disconnected from reality.)
I went from "ugh, this guy's pretty full-of-himself and bullshit-heavy" to "this guy's a loony" with the diver incident, but I was never particularly impressed with him beforehand. Like, even if he wasn't an unpleasant bigot, he still wouldn't be somebody that I'd be very keen on.