Wow, I really did not expect them to approve Elon's 2018 stock award. Does voting for it have any advantages for other share holders?
As I understand it, he and the stock holders made an agreement some years ago, that entitled Elon to a certain amount depending on how the stock performed. It turns out the stock performed really well, entitling Elon him to a really, really big bonus. I get that this is somewhat weird given that people are being fired and that Tesla is currently not able to sell their cars at the same rate as they are being produced. But is this enough to withhold the bonus? Are there some aspects of the agreement that Elon did not adhere to? From my point of view it looks like Elon was simply able to make a really good deal with the shareholders.
https://courts.delaware.gov/Opinions/Download.aspx?id=359340
> Musk controlled only 21.9% of Tesla’s voting power, so he lacked mathematical voting control...
> Defendants sought to prove otherwise, and they generally contend that the stockholder vote was fully informed because the most important facts about the Grant—the economic terms—were disclosed...
Basically, the shareholders voted on the grant while having a full understanding of the economic terms. It was awarded by musk, to musk, with approval of the shareholders and (supposedly overly friendly) board.
It really makes it sound like the judge might have been wrong based on the sequence of events we have now, which is:
1. The shareholders approve a stock grant on economic terms
2. A judge says "If the shareholders knew everything, they wouldn't have approved that"
3. The shareholders, now knowing everything, approve it again despite it having almost no benefit now
That really really makes it sound like the shareholders did in fact want to approve it in 1, and so the information they didn't know wasn't all that important, was it?
I know it's a different set of shareholders then and now, but still...
That's not what the judge said. It's more like "this award didn't follow the requirements for such an award for a corporation in Delaware". It doesn't at all depend on some prediction about what the shareholders would or wouldn't do in other hypothetical scenarios.
Because Cathie Wood fund is a major shareholder, but has a stake on XAI, as she reluctantly admitted on CNBC.
From the case details below, even if it romanticizes a little bit the Tesla journey, while forgetting the more than 5 Billion in government subsidies, his companies received until 2015, is pretty clear there is no Corporate Governance at Tesla. At least not as you learn about when studying for a MBA :-)
The board and compensation committee are is long time friends, his accountant, his brother and so on. If Tesla shareholders are willing to invest in the company, it's their money. Delaware law exists to enforce shareholders protection for all shareholders, so they can continue to choose it as an ideal location to incorporate a company.
This case also raises serious issues of what real companies governance means, and specially in public companies. Not only for Tesla but for many other companies. Explains why in general, CEO and Board Level compensation, continues to raise at a pace that obfuscates the raises of normal workers.
It's governance by checklist. By it's not much different from a CEO, who would decide to blow 100 million on a Las Vegas party using corporate funds, or hire his family, under the the threat of leaving the company, or tanking the share price. If shareholders vote for it...
https://courts.delaware.gov/Opinions/Download.aspx?id=359340
Why do government subsidies get brought up so often as if those alone are to credit for the success of Tesla and SpaceX. As if the other companies in the same space do not get them.
Likely shareholder equity would be wiped out and they’d reorganize. Isn’t the whole deal that investors get the upsides for taking the risks on the down?
Rather, it's quite obvious he's a modern day Ross Perot who has perfected billowing up his companies on the taxpayer dime. And a manned trip to Mars represents the fattest international contract the world has ever seen.
If he bamboozles the world into financing this interplanetary field trip, he's going to personally end up with a net worth in the trillions...
Not sure if that holds a value for investors in publicly traded companies.
Well...There is at least the 21% majority "funding secured" shareholder, to which keeping his word was not so important...
He has pretty much always supported democrats after all.
Not that's any excuse but that was how the twig was bent.
* Original being more or less contemporous with the novels Riotous Assembly and Indecent Exposure which lampooned the times.
Things that you could do accidentally with a thumbslip should only have a certain weight attached, and being quick to reach for a description that includes people who want Jewish people dead should be done cautiously.
Never heard him being called Columbia University or Harvard student.
Of course they would: from financing his own private vendettas (using Tesla to finance his Twitter acquisition) to rerouting GPUs ordered by Tesla to Twitter, who wouldn't want Musk to do that?
Comparing today to just before the Twitter takeover, the Tesla valuation is majorly down. And this is adjusted for the stock splits.
https://electrek.co/2024/04/22/elon-musk-pigeon-ceo-former-t...
The board seems to be working for Musk more than they're working for Tesla.
The deal was clear, the milestones were very high and it was done at a point in time when everyone expected Tesla was going to go bankrupt.
He basically got 10% of the increased value of Tesla. He created $450B in value, and got $45B.
Plus he can’t sell for 5 years.
Does that mean USD is not real money either?
Of course, Musk is not a typical career CEO. But still, he has a serious interest that his contribution to the path of Tesla is extremely overrated.
The "He didn't do anything valuable anyway" and "His pay package is too valuable" arguments are in direct contradiction.
This money they then use to buy property and other wealth. So, they make more money with not really their money (debt) and they use all tricks in the book to minimize their tax burden - which is much lower compared to (relatively speaking) low and middle class folks who earn most of their money through income and pay high income taxes.
So, you see, even though his pay package is in Tesla stock and its value therefore "not real", he uses it to get very real cash using it. In finance this is called "leverage".
In 2018, Tesla employed ~ 14800 people, 56 billion divided by 14800 = 3783783. So apparently in 2018, for every staff member he apparently added ~ $3.7 million dollars worth of value that he should be compensated for in the form of a bonus?
It's ridiculous.
If Musk buys a robot that can weld a body 2x more efficient (installed and maintained by an external vendor), increasing the value of the company, which employee created that value?