Elon Musk will move Tesla's incorporation to Texas following $56 billion ruling, tops...

[Endymio]

Well, you certainly made it clear you STILL don't even understand what this case is about... [it's] about Delaware corporate law requiring PUBLICLY TRADED company with public investors to have an independent board

So many errors. First of all, Delaware corporate law is the same for private firms as public. And the board scrupulously followed Delaware law. Not only that, but when the original board was dissolved by the demand of the SEC, the new board **also** voted to retain the pay package. Who's on that board? Larry Ellison, CEO of Oracle, James Murdoch, CEO of Fox, Robyn Denhold, CFO of Australia's largest Telecom company, Kathleen Wilson-Thompson, head of Walgreen's Human Resources. None are "yes men" beholden to Musk.

If I am a rich & famous movie star, and a movie studio offers me $0 salary + 20% movie profits OR $100,000 salary + 0% of the movie gross, I would take $0 salary + 20% of the movie gross because I don't NEED the stable salary...

LOL, you couldn't have asked for a worse example. An actor completes a film in a couple months usually, whereas Musk committed to ten years. Do you see the difference between not getting paid for 2 points versus ten years? And while most films turn a profit, Musk was attempting to do something no one else had managed in the last 100 years -- start a profitable new automaker. And not just start it, but grow it to larger than any of its century-old competitors.

And yet, guess what? Even still, the vast majority of actors demand a guaranteed salary. The "rich and successful ones" often demand millions for a couple months work AND a share of profits as well.

If you say that Musk joining Tesla in 2005 and investing his money and significantly growing the company makes him a "primary founder,"

Reading comprehension FTW. I never used the phrase "primary founder". And the fact remains that when Musk took the reins, Tesla was a bankrupt firm that had produced less than a dozen vehicles in total. And when Musk agreed to this package, most of the planet was saying what people like you still are: "once the existing automakers start taking EVs seriously, Tesla is toast!".

[HEADING=1][/HEADING]

 

[Bluescreendeath]

So many errors. First of all, Delaware corporate law is the same for private firms as public. And the board scrupulously followed Delaware law. Not only that, but when the original board was dissolved by the demand of the SEC, the new board **also** voted to retain the pay package. Who's on that board? Larry Ellison, CEO of Oracle, James Murdoch, CEO of Fox, Robyn Denhold, CFO of Australia's largest Telecom company, Kathleen Wilson-Thompson, head of Walgreen's Human Resources. None are "yes men" beholden to Musk.

You want to name drop famous people like James Murdoch and Larry Ellison, but you ignore the fact that James Murdoch is a close friend of Elon Musk and they've been friends since 2006. Larry Ellison also said he and Musk are "very close friends."

Stacking the board with your close friends means the board is not independent.

The majority of the board had strong personal and/or professional ties to Musk. 5/8 of the board members were beholden to Musk due to these relationships. That is why Tesla's own advisory companies Institutional Shareholder Services and Glass Lewis & Co. recommended Tesla get rid of people like James Murdoch and Gracias.

Kathleen Wilson-Thompson is the only person of the three people you name dropped that doesn't have close personal or financial ties to Musk. So you name droped 3 famous and/or successful people, but 2/3 of them are close friends with Musk and aren't independent.

Thank you for proving my point that Tesla's board was not independent and stacked with Musk's friends and other people beholden to Musk.

LOL, you couldn't have asked for a worse example. An actor completes a film in a couple months usually, whereas Musk committed to ten years. Do you see the difference between not getting paid for 2 points versus ten years? And while most films turn a profit, Musk was attempting to do something no one else had managed in the last 100 years -- start a profitable new automaker. And not just start it, but grow it to larger than any of its century-old competitors. And yet, guess what? Even still, the vast majority of actors demand a guaranteed salary. The "rich and successful ones" often demand millions for a couple months work AND a share of profits as well.

Irrelevant, and you are missing the point. That was just a hypothetical example to show you there was a difference between the words "deserve" and "need" because you mistakenly thought those two words meant the same thing. I can pick hundreds of other hypothetical examples if you'd like.

I said Musk could take stock compensation with zero salary because he didn't need a guaranteed salary as he was already rich - thus he could gamble on the stock rising to greatly exceed any guaranteed salary. I also said he deserved billons in stock compensation. Thus, Musk "deserves" billions in compensation - he chose to take stock over any salary because he did not "need" that specific "guaranteed" salary.

The entire point is that "need" and "deserve" are not the same: Musk and Lisa Su both deserve compensation. Because Musk was much richer than Lisa Su, Musk chose 100% stocks + zero salary as compensation because he has a much lower level of need for a stable salary compared to Lisa Su who chose a combination of stable salary + stocks because she had a higher need for it.

Reading comprehension FTW. I never used the phrase "primary founder".

You were replying to a quote/chain of comments debating whether or not Musk was a "primary founder" and multiple people above are talking about "primary founders," so I assumed you were saying he was a primary founder. If you weren't then we can drop this topic of discussion.

 

[Endymio]

you ignore the fact that James Murdoch is a close friend of Elon Musk and they've been friends since 2006. Larry Ellison also said he and Musk are "very close friends. Stacking the board with your close friends means the board is not independent.

It's becoming increasingly clear that you don't understand how this whole "board of directors" thing works. A few points:

1. Board member aren't chosen by the CEO; they're voted in by stockholders. The board chooses the CEO, not vice versa.

2. Ellison didn't join the board because Musk liked him. He joined because he had just purchased $1B in stock, making him (at the share price at the time) one of Tesla's largest investors. He also has decades of experience of running a tech startup -- just the sort of person you want on your board.

3. Once Ellison voted for that pay package, Musk immediately converted Ellison's $1B investment into $12B. I think I'd be friends with anyone who made me eleven billion dollars.

4. After the board approved this package, shareholders -- rather than revolting -- overwhelmingly reelected the same board in 2019 and 2020.

Kathleen Wilson-Thompson is the only person of the three people you name dropped that doesn't have close personal or financial ties to Musk.

And she also voted to retain this pay package. Oops!

 

[ZedRM]

Its a well-known and verifiable public fact that Musk was not a primary founder of Tesla. Therefore, if Tesla owes its primary founder, $55billion, its not owed to Musk.

Um, I've already linked a citation elsewhere from TESLA's OWN WEBSITE showing clearly that Musk is not only one of the originating founders but the PRIMARY founder. Maybe you missed it? Don't care what your problem is but your statement is factually incorrect.

 

[Bobbydpue]

3. The judge based her ruling on faulty law: that while the pay package was legal, since Musk was "also a large shareholder", he would have devoted his best efforts to the company regardless of pay. Under corporate law, the relationship between a shareholder and executive is strictly incidental, and one should not affect the other. At any point in that 10-year period, Musk could have legally sold his Tesla stake, and then been a CEO with no interest in company performance, other than his compensation package.

Where is the objective data? You made a statement, then didn't provide any supporting information.

The board of directors have a fiduciary responsibility to the shareholder and $56 Billion to Elon is outrageous considering the company hasn't made over $30B in gross profits ever. You keep talking about how Amazing Elon is at running the company, but $56 Billion is well over the company has ever profited. If he was so good why is his compensation package nearly twice as much as the company has ever profited.

 

[Endymio]

Where is the objective data? You made a statement, then didn't provide any supporting information.

I gave the data already. But I'll elaborate. The cardinal principal of corporate law is the segmentation between shareholders and employees: one provides the capital, the other the labor. Under corporate law, Musk the shareholder and Musk the CEO are two separate entities, and the status of one isn't allowed to affect the other.

Example: two accountants work for a company at the same level and experience. One is paid $50K a year more than the other, simply because he's also a shareholder. Again: a company is considering two applicants for a new position. One is slightly more qualified, but they hire the other because he owns shares in the firm.

This is the error the judge made. She effectively stated the board should have taken into consideration the fact that Musk was a shareholder when setting his compensation.

The board of directors have a fiduciary responsibility to the shareholder and $56 Billion to Elon is outrageous considering the company hasn't made over $30B in gross profits

LOL, what do profits have to do with anything? Have you ever purchased even one share of stock? Musk turned $50B of stock into $1000B, and did it in three years, against entrenched competition: a feat everyone at the time said was flatly impossible.

I'm also not sure that you understand that Tesla the firm paid Musk nothing. Not a penny. A stock grant doesn't change a company's bottom line whatsoever, whether they grant $10 or $10 trillion. That was the real benefit here to Tesla. When they were in a cash crunch, paying Musk even a salary of a few million dollars per year would have taken dollars they needed to spend elsewhere, and restricted growth.