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Delaware judge rejects Musk's $56 billion Tesla compensationwww.reuters.com/legal/delaware-judge-rejects-request-restore-elon-musks-56-billion-tesla-compensation-2024-12-02/
387 sats \ 10 comments \ @k00b 3 Dec Stacker_Stocks
I haven't been following this too closely but I guess this is the second time the pay package was rescinded after having board approval and >70% of shareholders in support of it. I read elsewhere that the plaintiff only owned 9 Tesla shares but I don't know if that's true.
Nice pay day for the lawyers:
McCormick also ordered Tesla to pay the attorneys who brought the case $345 million, well short of the $6 billion they initially requested. She said the fee could be paid in cash or Tesla stock.
This twitter thread suggests this is more lawfare and the Judge has pretty serious ties to the Biden family.
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210 sats \ 6 replies \ @gmd 3 Dec
I can actually understand the first ruling. I remember listening to a podcast which explained that as a public company, there is a specific process public companies must go through in coming up with compensation packages that shows they are acting in their shareholders' best interest:
  • No conflict of interest on the board
  • Demonstrate due diligence exploring packages in line with similar industry standards.
Ie how did they come up with the numbers they did? Who is to say 1/2 of 1/3 the number of shares would not have incentivized Elon who is already incentivized by owning a large percentage of Tesla shares. Did they even discuss capping the upside? Or did they just go along with Elon's first proposal...
That being said how can you throw out the compensation after a second vote where voting shareholders now all have their eyes wide open...
The $345 million seems 1000x more egregious though... how in the hell do the courts even justify that without some sort of cap...
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278 sats \ 5 replies \ @freetx 3 Dec
Musk's 2018 pay package gave him stock grants worth around 1% of Tesla's equity each time the company achieved one of 12 tranches of escalating operational and financial goals. Musk did not receive any guaranteed salary.
Well, why would they "cap the upside?" I mean each 1% grant of stock options was dependent on him hitting specific revenue/market growth goals.
If Musk makes more money from each 1% grant, then the rest of the shareholders (the majority) also makes more money....
The fact that TSLA shares are now falling after the judgement shows that the market thinks this will hurt the company.
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177 sats \ 4 replies \ @gmd 3 Dec
Why not consider capping the hype or other deal structures, in order to demonstrate due diligence to shareholders? He already makes a shit-ton of money on the stock growth because he already owns an immense amount of shares- which should bring him enough motivate him to succeed. $50 billion (now way higher) is unheard of.. what's the next highest stock comp in the tech industry? Would not upside up until $10 billion not be sufficient to motivate a CEO? Did they discuss giving him a guaranteed salary in return for an upside cap? It seemed there's a process the board is supposed to go through for public companies that was not followed (my 4th hand knowledge from a long forgotten podcast haha).
IANAL but to me when I hear horror stories about divorce court settlements and other crazy contract low stories it's not too surprising that the initial ruling on the comp package was made.
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188 sats \ 3 replies \ @freetx 3 Dec
Why not consider capping the hype or other deal structures, in order to demonstrate due diligence to shareholders?
Well those are a minority of shareholders. What happens to the wishes of the 70%?
If you were one of those 30%, the non-commie solution would be to sell your shares and move on.
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21 sats \ 2 replies \ @gmd 3 Dec
Well as I said the first comp package I think everyone laughed initially and didn't take seriously, so lawyers could later poke holes in it by saying that due diligence in line with other public companies was not demonstrated.
This 2nd time around the value of the comp package is well known and they voted again to give it to him- so I don't know how this judge could rule against it but IANAL.
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44 sats \ 1 reply \ @freetx 3 Dec
It would be interesting to know exactly who are the plaintiffs here....Probably some large wall-street firm upset that their investment is only returning 300% instead of an expected 320% if they can take Elons comp package....
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11 sats \ 0 replies \ @gmd 3 Dec
Probably ambulance chasing lawyers who know they can make $1/3 billion on fees 👀
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21 sats \ 0 replies \ @BlokchainB 3 Dec
Smells like corruption
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0 sats \ 0 replies \ @Satosora 3 Dec
This is just wrong. I remember the first time it happened. And he has to pay the fees? They are giving him the run around, but for what purpose? What is bidens beef with musk?
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0 sats \ 0 replies \ @nitter 3 Dec bot
https://xcancel.com/KanekoaTheGreat/status/1863719111265751137
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