Tesla loses bid to restore Elon Musk's $56bn pay package

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straight tender snow enjoy cover employ lush worm continue reply *This post was mass deleted and anonymized with [Redact](https://redact.dev/home)*

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Shareholders voted for this twice. Regardless of opinions of Musk, this sets an extremely weird precedent.

This shall go to the Supreme Court of Delaware. Corporations will also leave Delaware. This judge is a dipshit. The shareholders voted twice for this to happen. She doesn’t control Tesla, the shareholders do.

This judge is a biased dipshit. Fire them. What kind of precedent does this set when courts have more power to decide how executives are paid than by shareholders?

He’s mad bc he’s a liberal and Elon doesn’t share his views

100%

Tesla "loses" bid? I don't think Tesla *lost* anything. $56B, whether it's stock options, cash, or a mix, is insane for a CEO. The ruling was that it was a breach of fiduciary duty, that the board was too heavily influenced by Musk because he has ties to many of them.

i don’t even agree with most of musk’s recent actions but what’s the justification for this? He set lofty goals that most thought was unachievable at the time, and the company hit them. Whether that’s fair or not now is irrelevant, a deals a deal and the shareholders voted to uphold it. EDIT: Encourage you all to read through the thoughtful replies from others, the case is more nuanced than most people realize. I’m not sure of the true correct answer without reading much deeper into it, but I hope the result is determined based on true legal merit rather than political opinions. If there is legal basis for the claims that he unfairly created this compensation package deal - then the deal should be canceled (regardless of the shareholder vote, it’s important to protect minority shareholders as well that’s the responsibility of the law). If there is no such legal basis, then the man should get his money.

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This is not even the biggest issue here. The fact that all shareholders got the opportunity to vote again after those targets were met and approved the pay package hindsight too is a really strange thing for a judge to be the final decider on.

We voted for this compensation twice. His performance is what's insane. We paid him $50 billion for increasing the value of the company by $500 billion. So worth it.

The ruling was that it was a breach of fiduciary duty, that the board was too heavily influenced by Musk because he has ties to many of them.

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The original lawsuit claims false data was presented at the time of the deal. I haven’t followed closely but for this to reach the courts and lose against arguably the best paid lawyers on earth suggests there’s merit to the lawsuit and there are compelling reasons it won against Musk. Musk understands the power of public discourse, so the folks on reddit and X etc can say all they want, but in the realm of publicly traded companies it’s usually the laws and facts that win out. From what I have followed, I’m frankly incredibly surprised that Musk is allowed to even serve as CEO or that Tesla remains a publicly traded company. My parents’ generation saw the fall of Enron. I wouldn’t be surprised if we experience the fall of Tesla. I’m not saying I think it will happen, but it very well could.

because delaware protects the rights of \*minority shareholders.\* whether or not the majority approve of it is part of the issue, but it's not the entirety. a guy with just 1 share has standing to contest a deal that is unfair to him under the law, even if he is the only one that is against it.

I vividly recall this pkg as if it happened yesterday. The way the tranches were structured ensured that if he failed to meet each lofty goal, he would receive zero or nothing. CEOs publicly ridiculed the package’s unachievability and questioned why a CEO would agree to such an unrealistic goal. While the judge is correct in asserting that he has influence over the board, she is mistaken in claiming that it was unfair or excessive. As others have mentioned, the package was upheld by shareholders twice, with nearly unanimous support.

That’s honestly fair, thanks for taking the time to give a genuine response. I myself can’t say i’m informed enough to know more than the lawyers in the case either, I guess I should look into the details of the case more. I might’ve jumped to the conclusion that this was politically motivated more than logic based, but if there is merit to the case then I hope the legal process sorts it out correctly regardless of the original deal. I also agree I don’t think Musk should be CEO anymore, I believe Tesla’s an amazing company that’s now being limited by flawed decision making at this point. Musk was amazing for the company as it grew to what it has become, his ability to generate hype for the company is a big part of Tesla’s growth in my opinion. However lately I feel like it’s being hindered by the silly promises and decision making coming from Musk/leadership (like the Cybertruck, and now cybercab timelines). Just imagine if Tesla focused on further expanding their lineup to the mass market rather than the endless delays that came from Cybertruck… But this is just the thoughts of someone sitting at home, not claiming to know it all if I really knew how to better operate Tesla I should build a company myself lol

No, they won’t. Everyone incorporates in Delaware for a reason. They have insane foundation for corporate law (plus a bunch of tax benefits). This decision is exactly what you want out of the court. Keeping all parties in line, officers following their fiduciary duty, etc. The only people that are going to leave are the likes of Elon (grifters, shady).

The ruling was that it was a breach of fiduciary duty, that the board was too heavily influenced by Musk because he has ties to many of them. That shareholders voted in favor twice is irrelevant to the judge's ruling. To quote [someone else](https://www.reddit.com/r/teslamotors/comments/1h57lw9/comment/m04txxe/?utm_source=share&utm_medium=web2x&context=3) in this thread: >because delaware protects the rights of \*minority shareholders.\* whether or not the majority approve of it is part of the issue, but it's not the entirety. a guy with just 1 share has standing to contest a deal that is unfair to him under the law, even if he is the only one that is against it. Bottom line: he has ties to many of the board members, who would of course approve a package to be voted on in favor of their friend, particularly given it was ~~crazy goals no one thought he would hit~~ expected goals the board did expect him to hit, and 1 shareholder thought this pay package was insane and filed a lawsuit. Welcome to Delaware, bitch. [Here's some](https://www.reddit.com/r/teslamotors/comments/1h57lw9/comment/m04v55u/?utm_source=share&utm_medium=web2x&context=3) [further reading.](https://www.reddit.com/r/teslamotors/comments/1h57lw9/comment/m05cnf4/?utm_source=share&utm_medium=web2x&context=3) [And this](https://www.reddit.com/r/teslamotors/comments/1h57lw9/comment/m05bs2c/?utm_source=share&utm_medium=web2x&context=3) (best post in the thread, IMO). IMO, calling them "unattainable goals" only speaks in favor of voting in favor of it. However, that was not the case. They were attainable, and the board knew.

The whole legal system in theory is to protect the rights of the minority over any other government branch.

The issue was that he set goals that were known internally to be quite realistic and the board didn't try to bargain with the insane compensation he asked for because he had nearly complete control of the board. It was judged to be illegal in the first case, probably on account of not acting in the interest of the shareholders or smth, so the same company passing the vote again doesn't change the ruling on the legality. I think the amount of money involved is sickening so I'm glad it's been stopped again, although the requested attorney fee was also incredibly slimy and even the $345 million attorney fee is ridiculous EDIT: Important note, Delaware is the standard state for company incorporation because the courts are very educated in corporate law and are very favorable to companies in general, so it's significant that they would strike this down IMO

Let's say you work for no cash pay building your business (let's say a new car dealership) to help it grow faster. You are currently selling 30 cars a month. You write a contract being promised to be paid in shares of ownership down the line instead of cash right now for hitting certain goals of sales. Your highest goal is 50,000 cars a month, which will give you 20% more ownership of the company. The board scoffs at you and says SURE! and sends it off to the investors which approve of it. 5 years later, you are now one of the most successful car dealer businesses in the entire world. Nobody saw this coming. You are selling over 90,000 cars a month. Now a judge says no way! You're rich already and we don't like you! You don't need that 20% extra ownership since it's worth $500 million dollars! And strikes down your compensation. Is this fair?

This judge is? Racist! She don’t like southafricans🙈 

Corporations aren't leaving Delaware because of one ruling, against one company, dealing with one specific issue. Sorry, too many benefits to incorporate there.

[Tesla has already appealed](https://x.com/tesla/status/1863730393930735634?s=46&t=EkpToHWw3RdSnZl0TVSdcw)

This makes sense, honestly I’m guilty of jumping to a conclusion without fully reading into it. Shared more thoughts in a different reply but appreciate the response!

Each board member owns 0.05% or less of the stock. Their combined votes are practically irrelevant compared to overall investor votes.

Hahaha

bribed people voted for it that's for sure

I'm sure they have. Helps to have bought the ear of the most powerful man in the country.

Nobody read the court's document it seems. She lays out 4 reasons on why the Defendants' motion to revise the judgment cannot be accepted. 1. The new vote is evidence created after the trial was concluded with all claims addressed (except the lawyer fees). There is no legal basis for it to be used to change a judgment. 2. If constructed as an affirmative defense instead of new evidence, then it was not raised in a timely manner as it was filed one year and half after the trial started and 5 months after the judgment was made. 3. "A stockholder vote cannot ratify a conflicted controller decision" this one is more technical, something about MFW framework not being respected. 4. The proxy statement for new vote is misleading. Tldr : this is not a new trial and the arguments presented were not strong enough to justify a revision.

A lose is a lose. You can always try again though.

Too rich? No, that wasn't what the judge said. The judge claimed the payouts were a breach of financial duty to the company/board, that the payouts do harm to the company/board.

This is stupid. Shareholders voted twice for it

Look at the share price 2018->2024. He made everybody loads of money. Yes, he deserves the money.

Shareholders can’t override fiduciary duty to other shareholders. This is not uncharted territory here. The courts and the lawyers know the law, and the precedent.

Imagine following the laws of the country. I don't like it so I will wreck the SEC and dismantle those laws for my personal benefit.

That is for the first vote. The second time all the information and more was available and it got even more support.

Yeah no problem! Honestly this is a more nuanced situation than most people will say, although I still think the decision of the court is correct, I think there are valid arguments in favor of the compensation package

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He got compensated. Now we get to keep that 50B. Win win.

Honestly I don’t care either way, he has like $150 billion, he has zero need for any more money, ever. You could take 99.99% of his wealth and he’d still have $15 million, far more than most Americans will see in their entire lives. But that much money going to anyone is grossly irresponsible by a corporation in my opinion.

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And the craziest part about this is that the majority of shareholders, twice, voted that it was fair compensation with this very fact in mind. Once before the fact that Tesla became a trillion cap, once after the fact. They can argue that shareholders were coerced, but I don't see any such evidence.

I don't understand how anybody thinks he is worth the salary of every fortune 500 CEO x10. Crazy.

Said increase accomplished largely by Musk lying about FSD capabilities.

It isn't about coercion. It was about influence and the ridiculousness of the payout. There's lots of comments in here that "but the shareholders voted for it twice!" but that isn't the point/ruling the judge made. Twice.

Not sure if you're sarcastic or not over text, but yes it feels crazy that a judge has so much to say about how executives are internally compensated.

I agree, it’s a pretty silly that people on reddit get so riled up about whether he gets paid the package or not. But how much wealth he has is an entirely different and separate problem with how wealth is distributed in this country and around the world, I wish I knew what a practical/feasible solution would be in today’s political climate

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Actually it doesn’t set precedent, the ruling is based on it. You should read the official court document instead of starting conspiracy theories and regurgitating Reddit comments. For the people that aren’t drones to read: https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/r_wXxfW2wy_M/v0

This is totally irrelevant how much money he has, fair is fair

Me and my 1 share voted against it

What rules were broken? oh wait there were none.......

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The board is irrelevant. *Shareholders* voted. The board combined owns less than 0.5% of shares (aside from Elon of course). And even if shareholders were unduly influenced by the board in the first vote (they weren't), that can't possibly be true in the second vote when all the facts of the case were front page news.

lol. That’s such bullshit.

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"known internally to be quite realistic" 100% false and you can not provide proof.

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Someone with that much power and influence, including influence over the board of directors that approve this move. Fair is fair, this wouldn’t be fair, it’s egregious and wasteful for a corporation to allow.

Par for the course.

X for sale.

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You can't retroactively award compensation though. Nothing stops the company from just giving him a $56B payment in the future.

Fair. I don't own Tesla stock and don't normally track shareholder votes. I was way more interested in Tesla when I first got my M3 but it's been 6 years and Elon is insane.

Good, but $345m for the lawyers seems excessive too.

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Nothing stops the company from awarding the shares going forward, they just can't retroactively instate it.

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> You can't retroactively award compensation though Sure you can, why not? Where are people coming up with these silly ideas?

Stock is up 1500% in 5 years and he hit every insane metric in the deal. Who gives a shit.

It's comical how much they believe their own obviously false verifiable evidence. Anybody who remembers that time knows the entire business world was laughing at him for taking this deal. Everyday somebody was on CNBC explaining how Tesla will go out of business.

He should have to have 100% Customer satisfaction to get that bonus

the decision was political

Take that, fucker!

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Every Tesla employee should get a $500k bonus instead.

No, it's from growing car sales by over 4x in 5 years and going from being unprofitable to being massively profitable. Regardless, we got paid, and that's what matters. I'm fine with paying the CEO 10% of what he makes for shareholders. That's a fair deal. If the company performed poorly under his leadership, he would've gotten nothing. His pay scaled with the company's performance.

And yet here we are... I guess Tesla should have retained you for their legal counsel.

Yes, cheating someone out of payment is a great way to make sure they perform well for us in the future. What a great mindset.

Based on what?

Good

lol good

lol yeah it’s the car sales (just don’t look at sales vs market cap for any other auto maker on the planet)

This ruling doesn't say "you can't retroactively award compensation". What you said is simply false and has nothing to do with this case.

electric vehicle maker man baaaaad

So the logic is he is too close to the board and they gave him the sweet pay package of no money and only stock options if he hit crazy goals no one thought would happen? Sounds like the "board who is too close to him" tried screwing him over where he would work for years for nothing. I don't understand how anyone including the judge can say the board is too close to him but gave him a crap deal he should never of made anything off of, but actually were overpaying him ...

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Another one with the superlatives. What "no money" are we talking about here?

[No one saw this coming!](https://imgur.com/a/gEN9YZW)

Um: 56,000,000,000 is 56 billion If the average salary is 56,000$ ... then it is ONE MILLION times bigger than the average worker salary.

The shareholders who sued give a shit, and they won.

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Nope, it’s clearly laid out in p83-86 of the [Tornetta ruling](https://law.justia.com/cases/delaware/court-of-chancery/2024/c-a-no-2018-0408-ksjm.html). Even the most pessimistic internal projection (which was only shared after the Proxy vote), predicted achieving milestones well ahead of schedule.

Shareholders cannot vote to approve something that is illegal. It’s not really that weird or unusual, people are just obsessed because it’s Musk.

Yeah, I decided to leave it. If you move the average salary to $100k, it is indeed ***only*** 100,000x, leaving in the "at least" to cover the lower or higher average. It may be likely the actual average is $100k. It really depends on the pay of factory workers, as there are likely way more of them than there are people working on the tech stack and design (though their pay is probably bloated compared to the number of factory workers), and then you throw in the bloated executive pay. In any case, I'm ignoring Elon's own pay.

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My thoughts exactly. Hindsight is 20/20 but the goals that were required were crazy at the time. Even Tesla haters like to pretend like it was expected Tesla would even survive those years, let alone hit the requirements.

> I’m not sure of the true correct answer without reading much deeper into it, but I hope the result is determined based on true legal merit rather than political opinions. This kind of response is absolutely mind boggling to me. "I am not going to educate myself on the topic, but I am going to passively accuse it of being politically motivated". What reason do you have to think it is not determined by true legal merit? Just because Musk didn't get his way? Remember anytime Elon brings a lawsuit he generally loses. Look back at the Twitter debacle. The man is never on the correct side of the law, everyone on this sub tries to defend him and give plausible deniability.

Do you find it concerning that internal projections showed it [far from unachievable](https://imgur.com/a/ZckBwfQ)? In fact, they predicted an [imminent s-curve growth trajectory](https://imgur.com/a/gEN9YZW).

Me and my (almost meaningless shares) voted against this. The judge laid out the reasons for her ruling clearly. For me, it was clear that there was no reason to award the CEO the entire net profits of the company to-date in one year. Elon made plenty of money with the shares he already owns - enough motivation to keep him pretending he's really smart for another 10 years.

> Shareholders voted. Shareholders cannot vote to approve something that is illegal. Even if shareholders know that the compensation package doesn't protect their fiduciary interest, they cannot approve it. Just like shareholders cannot vote to murder or rob a bank, because those are illegal actions, they cannot vote to implement a compensation plan that breaks laws regarding fiduciary duty for publicly traded companies. > And even if shareholders were unduly influenced by the board in the first vote (they weren't) This isn't even the legal basis for blocking it. Everyone defending Musk hasn't read the court order and appears to have zero understanding of corporate law.

You really think all of Tesla's growth was from FSD? The Model Y alone is the best selling car, *globally*. Not to mention that they have the highest profit per car. Plus most people aren't paying $10k for FSD. Recently, it's likely accounted for a lot of their growth because the jumps in performance are being seen firsthand(V11, V12, V13, etc).

So Tesla can’t give someone 56 billion if they feel like it? It’s against the law to give money or something?

pay the fking man. a contract is a contract.

https://www.reddit.com/r/teslamotors/s/94HUPfO1Ae

> she is mistaken in claiming that it was unfair or excessive. As others have mentioned, the package was upheld by shareholders twice, with nearly unanimous support. Shareholders voting to approve something that is illegal means nothing. The judge found that the pay package is not legal as the board did not abide by their fiduciary duty when constructing it. Doesn't matter if it passes unanimously, doesn't matter if your mother loved it, it cannot be approved by shareholders if it is illegal. Not sure what is so hard to grasp with this concept. Everyone claiming "shareholders voted for it! twice!!" seem to have no understanding of how the adult world works.

He took 0 salary.

“Tesla without full self driving is worth basically zero” - Elon Musk

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The problem is the laywers got paid 300 million and us shareholders got fucked while they claimed they were helping us.

its beyond ridiculous

The only plaintiff is one guy who owned 9 shares in 2018 when the suit was filed. Has been voted on twice now and there has been no SEC charges related to board independence so spare me.

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From the [court's opinion](https://courts.delaware.gov/Opinions/Download.aspx?id=359340) last year: > Ahuja developed, and Musk approved, the projections in December prior to the meeting (the “December 2017 Projections”). The one-year projections underlying the operating plan forecasted $27.4B in total revenue and $4.3B in adjusted EBITDA by late 2018, and thus predicted achievement of three milestones in 2018 alone. The three-year long-run projections (“LRP”) underlying that plan reflected that, by 2019 and 2020, Tesla would achieve seven and eleven operational milestones, respectively. Later they sought approval from stockholders and wrote in the proxy statement: > The Proxy stated that: “each of the requirements underlying the performance milestones was selected to be very difficult to achieve”; the Board “based this new award on stretch goals”; the Grant’s milestones were “ambitious” and “challenging”; So the board's internal projections determined that Tesla would hit 3 out of the 16 milestones in the first year. They also projected they would hit 7 milestones in year 2, and 11 milestones in year 3. Yet they told stockholders it would be incredibly difficult to meet these goals, while knowing they were quite achievable.

Gladly, once people stop quoting the shareholder vote as if that somehow magically makes illegal actions legal. Until then I will continue to educate the uneducated.

The board is absolutely relevant. Ignore the shareholder vote. The board is the one that approved the compensation package which shareholders voted on to begin with. The problem is that the board, which apparently is friendly with Elon, would approve what Elon put in front of them, whereas a more "neutral" board might push back a bit and negotiate. The argument here is that Elon created his own compensation package and the board approved as a "formality" because it's a required step to take. The board's responsibility was to make sure Elon had a fair compensation package. If the goals set in the package were presented as really difficult/challenging goals but in reality were easily attainable, then the board approved a compensation package that shouldn't have been approved to begin with.

You are correct. And, the guy who brought the suit owned I believe 9 shares of stock. If he had that stock during the period discussed, it would have 10x. He and all the other shareholders got exactly what they wanted and voted for (twice). The judge is an idiot and this type of ruling is going to cause companies to avoid incorporation in Delaware.

public company can try to do that, but there is a good chance it could get sued. So, to win the lawsuit it has to be done properly.

Sure but the current internal projections probably show robotaxies dominating transport in every city and an optimus robot in every house. The general consensus however is that those things probably wont pan out quite like that. Of course Tesla and Elon thought the goals were achievable. But most people thought they were wrong and that the S and X had sorta met the whole market demand for EVs at 100,000/yr, that the 3 would cannibalize that demand with lesser margins, and that eventually tesla would go bankrupt once ford, gm, toyota, etc got serious. Those weren’t just internal projections, the S curve is everything they were talking about. It’s why they built a whole giant gigafactory and made Panasonic build a bunch of battery lines and then had them sit around twiddling their thumbs waiting while Elon perfected the fluffer bot. Its wasn’t a secret that they wanted the 3 to sell well. It just seemed unlikely it’d do what they were hoping.

Based on his fee fees

Sure it does. They attempted to have a shareholder vote to award the compensation retroactively after the initial court determination in an attempt to avoid the ruling. The judge slapped Tesla down. Here, I'll actually provide a source for MY statement, straight from the judge's ruling. It's a bit long but important to know the rationale and the last paragraph really explains simply why this scheme that Tesla attempted would be harmful, feel free to respond in kind. > ...Defendants seek to introduce a new fact that they created for the purpose of flipping the outcome of the Post-Trial Opinion. Defendants do not cite to a single case where a court has provided such relief under Rule 54(b) or otherwise. And no wonder: Were the court to condone the practice of allowing defeated parties to create new facts for the purpose of revising judgments, lawsuits would become interminable. > Indeed, Defendants’ version of “common law ratification” would allow a party found liable for fiduciary misconduct to deploy stockholder ratification to reverse the effects of a court finding long after that litigation is final. To their credit, Defendants did not shy away from the logical consequences of their argument. According to them, the ability to seek stockholder ratification after a post-trial decision is a benefit of their theory, because a thorough judicial decision provides stockholders with “complete hindsight” and “free choice.” They say that “[t]he ex post nature of this ratification vote provided Tesla’s stockholders with a level of information far surpassing the typical disclosure standards in Delaware. This comprehensive disclosure ensures that stockholders could evaluate the 2018 Agreement based on a full record and actual results, rather than predictions and projections.” At oral argument, they admitted that this principle was true not only as to the Post-Trial Opinion, but as to any opinion issued on appeal, where hindsight would be even more complete.In other words, in Defendants’ view, a stockholder vote can be deployed to reverse any form of judicial ruling, whatever the ruling, no matter how final. “Vox populi, vox dei.” > Defendants’ premise is even more troubling when one considers the purpose of derivative litigation. The private enforcement of fiduciary obligations has long been recognized by academics and this court as an essential means of deterring corporate misconduct. Even Defendants’ expert witness, who views derivative suits as having limited social value, agrees that they “play[] a useful role in deterring . . . egregious derelictions by corporate managers.” Stockholders pursuing derivative claims are already subject to a gantlet of procedural barriers erected to protect Delaware’s board-centric model. Among other hurdles, they face: the demand requirement; the contemporaneous ownership requirement; the continuous ownership requirement; adequacy standards; the threat of being Walmarted; and the risk of being derailed by a special litigation committee. > Imagine if, after a stockholder successfully clears these hurdles and achieves total victory, a perpetrator of fiduciary misconduct could then hit “reset” through stockholder vote, as Defendants seek to do here? Suffice it to say, such a practice would eviscerate the deterrent effect of derivative suits. Novelty is not necessarily damning, but Defendants’ novel request flies in the face of the policy bases for all relevant rules of procedure and the law-of-the-case doctrine—finality, efficiency, consistency, and the integrity of the judicial process. And on top of that, it could eliminate the deterrent effect of derivative litigation. These sacrifices are not worth the benefits, if any, of Defendants’ nouveau ratification theory.

Ok, I’ll spare you. Elon still lost.

LOL

Weird how they came up with 3 “pie in the sky projections” and none that failed to achieve multiple milestones within the first couple years. Maybe disclosing that before the proxy vote would have been helpful 🤷‍♂️

Even if you ambitiously say you can hit those goals, hitting them is different. If I have a trainer and a board of people who know me certify I can scale the Everest, its still damn hard. If the goals were so easy, why aren't all start ups going 10x value in 3 years? And I don't mean from 100k to 1 million, but from 100 billion to 1 trillion.

It's the growth and number of sales with only $40k+ cars. It's certainly not FSD though. Investors absolutely don't believe in FSD. I remember the day FSD Beta first came out. The stock didn't even budge. You'd think seeing how far along they were would move the stock up or down. Turns out investors are putting no value in it.

What performance. The clown is spending his time trying to run a government agency and burn down our government instead of actually running the company he's being paid to.

Discovery revealed internal projections showed 10/12 tranches being reached within 6-12 months. It wasn't "crazy goals" as has been reported. The deal was supposed to keep him engaged for 5+ years.

He said that because if other car companies solve autonomy and Tesla doesn't, Tesla wouldn't be able to sell any cars.

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Yeah, I'm leaving the post as-is. I've been reading other comments in this thread. Real eye-opener. Added your comment as "further reading".

What performance? Have you seen Tesla's numbers today compared to 5 years ago? It's incredible.

What do you believe that Elon did personally to help his company? He does not appear to understand basic elements of technology in interviews. Do you truly think it's him who has caused the companies value growth?

I find it hard to feel bad because even a pay package of 56bn is obscene. The fact that anyone thinks that amount of money should be in possession of a single person shows a deep moral and intellectual failing of America.

Where did they use the term "quite realistic" anywhere on the board or the CFO or anywhere? In fact the internal projections were according to Ahuja, purposely set to be unlikely to achieve. In fact they didn't achieve the highest tier metric that you're describing. The goal was to "set ambitious internal targets to drive company growth" The main point though, there were 3 different projections... So you're cherry picking 1 out of 3 inserting opinion that the board knew Elon would hit projections. Nobody knew that.

> Of course Tesla and Elon thought the goals were achievable. But most people thought they were wrong You’ve described the problem right there. Tesla BoD negotiated a deal on behalf of shareholders and publicly described the deal as “difficult to achieve, ambitious and challenging” while internally predicting the opposite. Proper disclosure would have solved this.

Are you suggesting it was not difficult to achieve? Not ambitious? Or not challenging?

> The problem was that apparently the goals that were set were known to be achievable. Yes, tons of companies go from nobody to highest market cap of their domain, in just a few years. Ask GM and Ford, they probably did it in 1960 right?

Most of them have never posted here before….

> Elon made plenty of money with the shares he already owns Someone else being CEO at the same performance would mean he gets the same compensation, twiddling his thumbs at home, then. It's like telling your employees they can be paid in rain, cause it rains now. Drink all your fill.

You keep focusing on rosy projections and seem to be skipping over the disclosure part. You don’t seem to care but the judge did > To show that the stockholder vote was fully informed, Defendants must establish that “stockholders were apprised of ‘all material information’ related to that transaction.

They were absolutely crazy, no-one thought they were achievable except for Musk and Tesla. The headlines called him completely delusional.

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bullish

Internally they believed 11/16 milestones would be achieved within 3 years. Do you feel the proxy language fully reflected that?

The problem was "Everyone thinks this is _impossible_, but we have internal information _they_ don't know that makes it barely challenging. So we're going to offer insane compensation based on perception it's impossible, while _we_ know it's just unlikely". The lie and deception is what did them in.

Is this good for the company?

The fact that majority of the shareholders voted for something illegal does not make it less illegal lol.

So we went from "100% false and can not provide proof" to "only 1 out of 3 projections." Does that mean we're down to 66.6% false and some proof? By the way, the other 2 projections you're referring to were also a lot more optimistic about meeting milestones than the proxy statement let out to be: > The 2017 Projections showed revenue growth of $69.6B and adjusted EBITDA growth of $14.4B in 2020. Under the July 2017 Projections, Tesla would achieve three of the revenue milestones and all of the adjusted EBITDA milestones in 2020. The Proxy did not disclose this. The last projection had them achieving 9 milestones out of 16 by 2020, instead of the previous 11: > The March 2018 Projections were more pessimistic than previous projections but still predicted achievement of one revenue and two adjusted EBITDA milestones by March 31, 2019, and further two revenue and four adjusted EBITDA milestones by the end of 2020. As discussed below, Tesla would issue a supplemental disclosure with this information, but not until after the stockholder vote. You asked for proof and I provided it, straight from the court's opinion. I don't know why you're arguing about the term "quite realistic". That's just common parlance to contrast with the language the board used to describe the difficulty in meeting the milestones publicly, which again did not reflect their own internal projections.

But but but, majority of the shareholders voted for that illegal deal! Don't you know that popular vote of shareholders should be able to override the law?!

what laws were broken? i'll wait.......

what laws were broken?

That’s cool man, nice way to put words into my mouth. I had a healthy dialogue in the comments with others, when did I say wouldn’t learn more? My main point was that it’s more nuanced than I realized as most things are - and i don’t think I can educate myself to know more than the actual lawyers and judges. I wanted to encourage others to learn more as well. but if you think I don’t have the right to question if judges/lawyers are politically biased especially in the political climate of today, then that’s your opinion. I was under the misunderstanding that the shareholders vote should be the only thing that should matter if there was a deal made, and I stand corrected and made the edit. Not just you, but really wish people in general would chill out with the attacks and have more dialogue. Maybe we would have a better country and better politics as a result of it.

Yeah, it’s great that they are looking after shareholder’s best interest by rewarding lawyers $350M representing someone who made large profit on his 9 shares anyway…

A lot of companies have ambitious internal projections; there’s no guarantees that they’ll hit them. If anything, when you go to reports back then, most news source were calling Musk delusional in his vision.

main stream media said the goals were impossible, which was echoed by everyone lmao

what about capitalism?

That's completely besides the point. I was only responding to the comment that this was "100% false and you can not provide proof." The truth is that the Board projected these milestones were likely to be completed (whether they were hard or not), and painted a much more negative picture in the proxy statement. The evidence supports that claim, and it's part of the reason why the judge ruled against him last year. You can agree or disagree with the law or even how it's been applied. We can all play armchair lawyers and judges here. But don't go claiming something is "100% false" when the court documents easily disprove that.

Countless small and some big executive decisions? He has shared many anecdotes over the years. The buck stops with the CEO. If you blame the CEO for a company's failures, then you must also credit the CEO for the company's successes. Elon successfully led two unlikely companies through extremely challenging times and they emerged as $100+ billion companies. He did that, whether you like him or not.

the greed is unreal. what could you possibly want with more money when you're already the richest person there is

Internal projections is not the same thing as insider information. They could have easily been completely wrong and Musk would gotten zilch for 5 years of work. Everyone would be laughing at him now for being a dummy; but the opposite happened. Most experts predicted they would fail; they believed the opposite on a gamble and they had nothing more.

Umm yeah we did because you said "quite realistic" which nobody on the board said that. That was your point. You omit part of your claim and pretend you satisfied the proof? How for example do you know these board members knew they would achieve specifically that projection as opposed to the 2 alternative projections? Then you pretend like that wasn't the question all along.

Feel free to read the court documents. You’re not entitled to get everything explained to you, and you don’t get to stomp your feet and complain about things you can’t comprehend.

Decisions get overturned all the time

Great, and maybe if they had shared those optimistic internal projections with stockholders in their proxy statement instead of pessimistically claiming they were "very difficult to achieve," they wouldn't have lost the case (that and the whole "fiduciary duty" of the board of course). Now they know, better luck next time!

I didn’t say Optimistic, I said ambitious; two very different things. Companies like to plan as if they are going to succeed, that’s not a new concept lol

still no laws were broken

Brother, I hope you can re read your statements and see you are doing exactly what you claim others are Your post over and over accusing the judge for making a politically biased decision. Again, what data at all do you have to even think is a politically motivated decision? As I stated this judge is highly respected. The political climate we are in today is exactly what you’re perpetuating, casting baseless accusations as a form of “having an open dialog” instead of opening with facts and letting that drive the conclusion.

He's getting it, and the lawyers will get nothing, I guarantee it.

illegal how? what rules were broken?

Shower thoughts, maybe Elon fucked the judges daughter? 🫡 Reddit downvote me into oblivion.

What internal information though? The company publicly said “we’re going to sell these for $35,000, we’re going to produce half a million of them next year, we’re going through production hell right now but eventually things will be great” The risky part wasn’t some internal secret like what the margin would be or how production numbers were looking. It was just “will people actually buy as many of these as elon is promising?” And there was no way to know that.

In case you wondered whether anyone noticed you completely failed to address his point, let me be the person to tell you: we noticed.

They probably have a blue check on Twitter though!

Oh so if the original poster you responded to only had said "they projected the milestones were more than 70% likely to be achieved," you wouldn't have spoken up? Want some help moving these goalposts? Looks like you're doing quite a bit of heavy lifting there.

I'm guessing xAI is going to be doing a lot more of the AI stuff from now on! Hopefully it doesn't impact FSD

We as shareholders collectively voted for this pay package, because it staked his entire pay on him leading the company to insane levels of success. If he achieved the impossible, he'd get a huge payout, as he should. If he produced mediocre results, he'd get nothing. The incentives were very much aligned with our interests as shareholders, which is why we overwhelmingly voted for it. I'm not arguing the morality of wealth inequality. I'm arguing that he earned this pay fair and square, because he delivered insane value to shareholders. If you don't understand why it's worth paying $50 billion to get $500 billion, you can't be helped. This isn't cash. It can't be "put back into the company". You know nothing about this. It's highly ironic that you're complaining about your 12V battery when Tesla was actually the first company to transition to lithium-ion 12V batteries and end the days of needing to replace them every few years. They did that at the end of 2021. They produce amazing products for consumers, which is why they're so successful. If you want to know my opinion on wealth inequality, I think it should be reduced (drastically). But only consumption. Not paper wealth. Because at the end of the day, consumption is what matters. If some people out there are extremely good at building companies and amass insanely high levels of paper wealth doing so, only to use it to build more companies that provide value to consumers, don't hinder them. But if they cash out and buy yachts, take a lot of their yachts and give them to poorer people. Not because they didn't earn the yachts fair and square — they did — but because it helps others far more than it hurts them. You just have to be careful about maintaining the incentives that drive these people to generate such massive amounts of value for humanity.

What about SpaceX, Boring Company, and Nueralink; all worth billions as well. How come no other EV start up has come any where near what Tesla has achieved. You’re quick to strip him of credit, yet what he has achieved is unprecedented.

Well, apparently you voted on an illegal pay package. 🤷‍♂️

Anyone that knows the facts should side with the promises the board made when they agreed to his terms. He meets goals no company has done before, and he gets a % of his company back. You can disagree with him being worth that much, but the facts say he should be given his % of the company back. This isn’t $56 billion in cash, it’s him trying to get a % of his company back that he gave away.

What do you think Fisker’s internal projections showed a few years ago? That they were going to go bankrupt?

Reddit is so fucked up about this. They hate him so much they’ll ignore facts and ethics. “Well he’s unethical and lies, so he should be cheated out of things too”

So does every growing tech company.

Did Fisker hold a shareholder vote where there was discrepancy between internal projections and proxy statements?

Maybe try actually reading. It's not hard to understand

Known to be achievable? Achievable is very different from likely. Very few companies reach $650 billion valuations. Zero car companies have done it, until Tesla. It was always an extremely lofty goal that would take incredible execution, and he delivered it.

tell me what laws were broken

Why is it illegal and why do you think it should be?

Go read [my other post](https://www.reddit.com/r/teslamotors/comments/1h57lw9/comment/m05mc40/?utm_source=share&utm_medium=web2x&context=3) that you're dual-wielding me on, the one with "some further reading".

You're the one who wants to know, so I'm suggested you take 1.3 minutes to actually read about it, that's really all it takes. But I suspect you don't care to do that, you just want to come on here bitch about something you haven't taken the time to understand

so no laws were broken, gotchya

Yep, exactly as I thought. Ignorance is bliss they say, continue on with not challenging your beliefs, enjoy life!

Hope he cries over it

no laws were broken, cheers

One COULD argue the lawyers saved the company $56 billion but I understand it depends on how you look at it. Either way, the lawyers asked for 10% of the $56 billion but the judge brought it down to the $300 million mark.

I responded.

Can you provide a source for your claim that main stream media was calling the goals unattainable?

I really enjoy how you just continue to confirm my thoughts on you over and over. You must REALLY want me to think that you are ignorant, there's no other reason to continue this line of responses.

relax, this will 99.9999999% get overturned by the supreme court

People are political. This decision is political, only. Period.

Yeah, a lot of CEO's have done the "took no salary" thing while the company provided their housing, transportation, and other non salary packages. Id happely work for no salary if I had everything required in life provided by my employer with stock too.

That means nothing. It means they had a path to enormous growth. Which should surprise absolutely no one; the cars didn't build themselves.  Elon was saying "I can actually execute this, and if I do I want to be compensated this amount." And shareholders agreed, because it was overwhelmingly in their favor; the deal was he'd multiply the value of the company several times over and in exchange he'd gain a few percent of it, amd if he failed he got nothing. Indeed, the opposite would be scandalous, fraudulent. Could you imagine what the headlines would say now, if it turned out that the board had made such a bold proposal with no path toward achieving it? It would rightfully be called stock manipulation.

Go find any clip of a finance show analyzing the pay package at the time and they all agreed it was very unlikely he would get there

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"most valuable" by what metrics? In terms of assets, not even close. EBITA, nope. Booked value, try again. If you mean SOLELY market cap, I have some DJT to sell you too.

Mic drop.

https://www.fool.com/investing/2018/03/26/the-real-problem-with-elon-musks-massive-tesla-pay.aspx

You greatly misunderstand what the pay package offered. It did not offer $56 billion; it offered options for shares of the company that were worth nowhere near that cash value. Those shares are only worth that amount now because Musk succeeded. Musk has no interest in money; he is interested in the influence they provide over what Tesla does.

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A lot of people on these comments pretending to be lawyers... 🤣🤣

I didn't see anything in the article that MSM claimed the goals as being impossible or similar. But, maybe I missed it which I'll admit to.

I'm not the one making the claim, the burden is not on me. As Hitchens's razor states; a claim made without proof is unfounded and I need not argue to dismiss it.

The burden is on you because you're making the claim it didnt happen. Also anyone with more than 2 braincells would realize it was a lofty goal based on where the company was financially at the time

Where did I make that claim? Please review my original comment.

Anyone with more than 2 braincells would realize it was a lofty goal based on where the company was financially at the time, you're just being annoying for the sake of it

Can you point me to where I mentioned "cash", "US currency", "moolah", "cheddar, "big faces" or equivalent statements implying hard cash? Oh yeah, almost forgot, "you FOOL!"

He also consistently lies to investors in order to pump the market cap, which formed part of the package

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Items can have value without the specific item being physical currency, i.e cash. If you want to argue that, you better be prepared to take down the whole accounting system.

lol how did I move the goalpost when you clearly have to rephrase your statement and then ask me if I would comment on it? Is that not literally moving the goalpost?

Indeed.

He didn’t give it away. He sold it off and used the money to buy twitter.

None of that is "you can't retroactively award compensation". It's "you can't reverse a judge's ruling", which is completely different and not at all what you said. And I have plenty of issues with the ruling as well, but I don't have hours to debate it in detail right now.

It’s “illegal” because the judge used her discretion and *felt* like it was “excessive”. It’s not like there are any firm rules on this particular ruling, and they clearly didn’t think it was illegal at the time.

Wall Street considers Tesla a car company still. TSLA’s price is mainly influenced by institutional investors rather than retail investors.

> Ignore the shareholder vote This is exactly the problem. Ignoring the *two* shareholder votes is clearly absurd given the facts in this case. To the extent that Delaware chancery court precedent requires disregarding the shareholder votes it should either be ruled inapplicable in this case or be overturned.

The board totally expected Elon to 20x the stock like it was a done sure thing. No one believed the board anyway. All the financial media said it was a crazy package and that it was pretty much the most share holder friendly deal there could be.

Well yeah, would you contiune working for free when you didn’t get the pay you where promised

So maybe now they can get a real board

Excessive? Talk about outrageous

Correct, public companies can't just give money away. Otherwise you could gain control of 50.1% of a company and make the company give you 100% of its assets.

> they cannot vote to implement a compensation plan that breaks laws The law that was supposedly broken is to protect shareholders from being misled into voting incorrectly by boards not providing them unbiased information. But the second vote conclusively proves that fully-informed shareholders overwhelmingly approve. Shareholders voted the same way *even with full knowledge of the allegations and the benefit of hindsight* which is the highest possible standard. > This isn't even the legal basis for blocking it False. It absolutely is part of the legal basis of the case. It's not the only issue to be sure, but it is relevant.

possibly the former senator from delaware knows a few people in that vast sprawling state

Correct me if I’m wrong but from my understanding, I took this to mean that this ruling was made because a shareholder vote cannot legally overturn a judicial decision that was made. That makes sense, and I get the argument of protecting the power of the courts to have weight in their rulings in order to protect against corporate/fiduciary misconduct. Setting a precedent where a shareholder vote can mean a judicial decision is ignored has its dangers and that makes sense to me. I’m guessing this also goes along with evidence that there was misconduct with either the shareholder vote or the initial compensation agreement - or else Tesla would have appealed the original decision rather than holding a shareholder vote to justify giving Musk the package right? Curious if anyone can provide insight on if this is the main reason the package was struck down, and/or if it’s because the compensation package is just not legally valid due to other reasons, or something else.

Insane… 345M in lawyer fees for doing nothing.

I refer you to the judgment, it outlines pretty well why it was illegal.

> Internal projections is not the same thing as insider information Yes they literally are. Like have you read what you wrote? Just read it again. Read what you wrote. > They could have easily been completely wrong and Musk would gotten zilch for 5 years of work. Sure, but again it's a big difference between "impossible" and "unlikely" >Everyone would be laughing at him now for being a dummy Yes because they didn't have access to the insider information...

discovery showed that apparantly these goals werent that crazy internally, only to surprised media and investors without internal knowledge

Exactly. Boards are BY LAW supposed to be "independent" from company leadership. Tesla's is about the furthest from that standard you could concoct. Violating that means that it (the company) opens itself up to being sued over every significant decision that shareholders deem not to be in their best interest.

Any source would be greatly appreciated, I see this mentioned on Reddit often but never see an actual source. I’m asking sincerely, not rhetorically

no laws were broken though

They should look into XAI also, i feel tesla deserves a portion of that company instead of twitter. Tesla is an ai company the most advanced, untill XAI stole its thunder.

There were plenty of people who, at the time it was initially announced, felt it was an absurd amount of compensation with really little to no risk for Musk. IOW, a gift from the board, a board Musk assembled and filled with friends and family. It's crazy to think this is a truly "independent" board as it's legally required to be.

Yes they were. There are actual laws against insider dealing, and Musk and his board of friends and family broke them. Yes, they broke actual corporate laws. That's why the lost in court.

It doesn’t matter. The process the board went through to set compensation wasn’t independent. Elon made his own comp package and had his friends approve it. If you want to access public markets that is not how it corps work.

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You can read the judgment you know, it's public, it lists what laws were broken. Contrary to popular belief corporations do have their own laws, and states like Delaware have their own corporate laws as well. Some of those laws - also surprisingly - actually protect minority investors from the oppression of the majority, or CEOs that try to get unreasonable compensation after stacking the board with his friends and family. I know it might be truly shocking but there _are_ laws against it. Laws that are meant to protect small investors like the guy who sued.

People with no access to internal data said it was impossible....who gives a shit.

Imagine creating evidence to support something in a trial that is already over. It’s inadmissible and a publicity stunt.

Check other responses in this thread, it was revealed in discovery.

0.5% instead of 10%

If Tesla's FSD predictions would only be half as accurate as their unrealistic compensation milestones.....

I mean automotive competition is good for consumers.

Supervillain in the making.

You said his claim was 100% false with no evidence. If you aren't backing that claim up then you've moved the goalposts.

Do you understand the concept of disclosure? You can't have one set of projections internally while publicly claiming another set of facts. Ask yourself: why didn't Musk publish the rosy business plans publicly? Wouldn't that help share prices? Oh, wait, he wanted that big compensation package.

So why didn't Tesla publish the internal projections that the goals were achievable before the vote of the pay package?

The lawyers saved Tesla trends of billions of dollars.

Why didn't they disclose their internal projections? That would drive up stock prices even more! Oh, but they didn't because they wanted to ensure Musk got paid.

Companies are designed to make money. If a company was given the chance to save $56 billion why wouldn't they take it?

I wouldn’t call it a loss… what’s he going to do? Stop being the CEO? At this point it would probably be a net positive. He has too many distractions and he too has become the distraction… so much so that I think Tesla would be better without him.

If a court allowed a business to save $56 billion, then why would that business fight to lose $56 billion? The board was friendly with Musk and withheld internal projections from shareholders.

By my math the lawyers saved Tesla about $55 billion.

It's about making 41% of your profits from government regulations that are about to get cut in the next administration.

The board didn't scoff at Musk. The board withheld internal projections that those goals were fairly achievable. The board was colluding with Musk. The real story is a rich got his friends onto the board and they structured a pay package that they thought would result in him getting paid big time. They withheld the information from shareholders before the vote. See how that's not fair? He would've done the work for only $1 billion. They were negotiating against nobody.

You haven't even read the judge's decision. Read it before you tell other people to stop commenting.

Musk was caught cheating. He was essentially colluding with the board to man his pay package while keeping relevant information away from shareholders. Read the decision.

Check out the [ruling](https://courts.delaware.gov/Opinions/Download.aspx?id=359340) in January 2024. The court found Tesla board of directors breached its fiduciary duty and engaged in self-dealing during the whole process of setting up the CEO compensation package in 2018.

I have never seen "investors" so ready to give away $55 billion. Would Elon have done that same job for a billion dollars? If so, then why did they board overpay him by teens of billions of dollars? If not, then what was he going to do instead, let someone else be the CEO of a company whose shares constitute a huge percentage of his wealth? A real board would've negotiated a much better deal. That's the entire point.

Why doesn't Musk donate to charity?

The court found and the muskrats admit that Tesla withheld internal projections that showed the milestones to be much more achievable than they were described to the public.

Corporations will not leave Delaware for this reason unless they are wholly dominated by a man child. Shareholders do not control a corporation. Officers and the board control the corporation.

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Ask so a conflict of interest as the muskrats is shifting assets such as microprocessors to another company at Teslas expense.

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Stop calling that a "package". This is M. Musk trying to steal Tesla ownership from small stockholder. The real term to use is "dilution". M. Musk with the help of -its- board is just trying to re-own massive chunk of Tesla and screw investors.

they asked for 6B at some point.

nope sold a lot of it along the way to keep the company afloat. it wasnt for a single purchase.

neutral or probably a bit bad. he made an a super risky contract where he would either get back his shares of tesla or get nothing he beats the odds and now he doesnt get his shares. how will he react to that?

tesla has now all the gpus it wanted. fsd v13 got delated one month and got in exchange it now has the availability of a willing to collaborate frontier ai company.

It’s wild to me how reckless people in this thread are. Laws exist for a reason, if they wanted to avoid this they could have simply abided by the law better. They aren’t lacking in money for lawyers. To quote Anthony Hopkins from The Edge: “Never feel sorry for a man who owns a plane.”


Lmao my guy’s a lawyer now, amazing

Couldn’t agree with you more my dude/dudette.

Not for doing nothing. For losing. Winning seems to have been worth 5.6 billion. Pity.

Ford’s market cap is $43B. So “you get Ford plus another $13B”.

All his net worth is tied up in all is companies. It’s not like he has a $100B in cash sitting in his savings account. Bue he has committed to [The Giving Pledge](https://en.wikipedia.org/wiki/The_Giving_Pledge) to eventually donate a majority of his wealth.

and they asked for 5.6b. It is crazy how much money the rich are transferring from one another for doing "some work". As long as you can print an infinite amount of money - this will keep getting worse

They asked for 6 Billion!

Next judge will fix that. A deal is a deal!

I'm certainly glad it went through, but what a wild idea that a judge can what's in the best interest of a company's shareholders. I can only imagine how lucrative and ridiculous the job some of these corporate lawyers lives are

is there a gofundme set up already or should i start one?

> The law that was supposedly broken is to protect shareholders from being misled into voting incorrectly No, quite literally the law is that compensation packages presented by the board of a publicly traded company must go through certain processes to ensure the board is upstanding its fiduciary duty to the shareholders. You keep injecting that shareholders are misled, that is the intention of the laws, but that’s not what the law states. It doesn’t say things are illegal only if shareholders are misled, there are specific components that the compensation package must meet. Namely has to be negotiated independent of the CEO. Has to be negotiated to protect the interests of the shareholders. Shareholders can’t just say “oh well we want to vote for a non negotiated package”. The compensation package has to be negotiated by law, regardless of if shareholders approve it or not. Just like murder is illegal to protect people from dying. But a person can’t say “well I want to allow this person to murder me”. It’s still illegal and not allowed. Even if the victim is aware of the intention and approves. So as I’ve stated, the shareholder vote is completely meaningless here

she makes no sense and i'm not a lawyer

LMAO if the judge purely ruled using her discretion and feelings, then it would have been immediately appealable to the higher court when she first ruled against Musk. Musk could have sought a writ of mandamus and got her removed from the case. That’s not happening because everything you said is a lie

> she makes no sense and i'm not a lawyer One might have something to do with the other ... But I explained it to you in simple words as well - they broke the laws that were established to prevent CEO/board/major shareholders from exploiting _minority_ shareholders. So it doesn't matter that _majority_ of shareholders voted for it, or that the board approved it.

I don't think you understand how these anti-trust laws work. I'm beginning to think Reddit isn't a place for serious legal discussion. I'll extend an olive branch and pretend for the moment that you know what you're talking about. Please point to the exact code or statute Tesla breached in this case which *doesn't* refer to a subjective standard like "excessive."

Aww. Poor baby.

Source?

I actually hold a JD and specialize in anti-trust cases. You are actually the one with zero understanding of the legal system but parroting your opinions as if they are valuable for anything other than toilet paper.

So a pay package worth more than 6 times the yearly income of the company after taxes. What are shareholders waiting to run away from this company? It would be insane even if it were 10% of that amount.

Tesla got a 99.5% discount by paying the lawyers $345mm instead of Musk $56B

I’m not a lawyer, so I don’t have an opinion _on the law_ that’s worth listening to (opinions are like assholes, and all…) — wish 99% of people on social media would admit similarly

About 15% of the time

Whatever, he will make 5x that being Trumps right hand man. Still crazy that a judge can over rule a free market and the will of the shareholders. Sets a bad precedent for innovation going forward.

Conspicuously absent is the code or statute. How predictable.

Well, just as a _**totally wild, random**_ example: _**If**_ the board of directors (the “company” as far as decision-making is concerned) didn’t act within its fiduciary responsibilities (i.e., _not_ acting per the “design” you mention), _**then**_ it might vote to give away, inappropriately, $56b as a large compensation package. Again, just spitballing, this might happen if the board was comprised of close friends and family members who acted more in the interest of another board member (i.e., someone they know and love) than the shareholders. … you know, like the very premise / accusations of this case. Before you read this and let your anger sharks start swimming, take a moment to realize that all I did was outline the claim(s) made by the plaintiffs.

Incorrect. Tesla was already profitable when he sold his shares.

It’s the same lawyer too who went after AMC.. it’s a corrupt racket where one firm is making money going after companies

Waaiiiit. I mean, it was Musk who set the lofty goal. He *deserves* 56000000000 dollars. We can't go rewarding the people that did stuff.

As a rule, companies don't publish these things. They're internal business intelligence. The companies do tell shareholders what their expectations are for the future at each shareholder meeting, and Tesla was indeed telling people that they expect huge growth.

The “100% false and no proof” into giant block of proof combo is hilarious lol

The US has different class of shares, so a CEO can own 5 shares out of 100 but gets 90% of the vote. I dont see how this is any different. Shareholders bought into a scam artist and thats their fault.

[https://courts.delaware.gov/Opinions/Download.aspx?id=359340](https://courts.delaware.gov/Opinions/Download.aspx?id=359340)

They were material information that was relevant to the vote! They could have changed the outcome easily.

It makes sense though right, they won, and they saved the shareholders 56B, and they want 10% of that. The only problem is that the shareholders did not 'win 56b' they just had their share value not diluted by 56b, so there isn't really any payout to take a % of.

This is the correct answer. They were attainable goals that the board thought were reasonable to hit, and the benefit package they were to pay him for reaching those goals were wildly non-normative. The board was made of people that had ties to him and it's seen as a fiduciary issue because they created a benefits package that didn't serve the stockholders and, instead, served to enrich Musk at their expense. The reality is none of that should even have to be explained when someone is granted a **$56bn** pay package for achieving 5 year goals. Nobody on the planet single-handedly is worth that kind of pay. If you want to put it in perspective, his 5-year benefits package (which goes beyond the literal $100bn he already made by his stock in the company and other places) is **708x** the salary of the CEO of Microsoft, which was already 68% more than the CEO made the previous year. Altogether, if someone made $100k a year and never paid taxes and never spent a dime of it it would take them **2,300,000 years** to earn as much money as Elon is worth. It's not in any stockholder, company, or nation's interest in a single individual receiving that kind of benefit package.

Did I say it's not?

This is wrong. The 6 billion are asked in money out of the cash of Tesla, while the promised shares are in stock and waiting since 2012 when the contract was made. Transfering this shares from Tesla to Musk cost the Company / shareholders nothing while paying the lawyers takes money from Tesla and so the shareholders. Also when the contract was done about 22.8 mio shares the value was $6.68 each and many laugh about Musk that he will work for free because never ever he will reach the milestones. He did all of them until 2018 and today he much much behind that. Good for all shareholders.

Just the lawyer fee award by the judge is half the [current record $688 million ](https://www.chron.com/business/enron/article/enron-settlement-7-2-billion-to-shareholders-1643123.php)in legal fees awarded in 2008 in litigation stemming from the collapse of Enron. This will be payed by the shareholders who voted AGAINST her decision twice in a case about protecting shareholder.

Autonomy is the future, any company that doesn’t solve it(or license it from someone else) will go the way of RadioShack. It’s like electric vehicles, a legacy automaker that decides to just stick with ICE and not change is doomed. If unsupervised FSD releases next year, even geofenced, the stock price will skyrocket. Hell, the stock was *falling* before Election Day, and has lost the last 3 years to the S&P, and barely beat it in the last 4. Tesla isn’t valued at $1T solely because of FSD, they’re a profitable company with high sales and margins per car. And it’s worth at least twice that if they solve autonomy.

Musk plays about 8 hours a day on diablo 4 anyway (no I'm not kidding, he actually does). The argument he would have to get such a large reward to keep him interested in Tesla at this point is laughable.

I've been reading but I haven't seen an answer yet. I know Musk can appeal this ruling, but if that too fails, what is his next legal recourse?

I’m a small shareholder and I voted in favor of the pay package but I support what is happening here because I acknowledge I don’t have all of the information.

It’s called FAFO. If you don’t follow the law you get punished. They should lose money over this

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I believe said shareholder is tainted - paid off to complain and effectively create a money grab situation

Lol, no they said that the milestones for compensation were hard to reach while the internal projections that they withheld said otherwise. Read the decision.

The milestones *were* hard to reach. . They had an internal projection that said they would be worth $650 billion if they accomplished all their goals. There is no world in which that's easy. Listen to yourself. They had internal projections saying they'd be the most valuable company in the world, therefore it was easy? Right now their internal projections say they'll be a $3 trillion company that owns the robotaxi and personal humanoid robot markets. Will that be easy?

The law is the law for investors and it’s pretty clear from the trial that the board did not follow it. If you don’t want to deal with public trading laws then don’t go public. The case was pretty obvious

Yeah, that's a pretty wild ride of an interpretation of my comment. He should be paid, but again, the value at the time was estimated to be almost the entire net profit of Tesla since he started as CEO. That's ridiculous beyond imagination.

You can buy a used Cessna 150 for less than a new Model 3.

The legal fees are going to the shareholder's legal team, not musk's.

I wonder what he needs all of this money for.

Lol, companies are going to avoid incorporation in Delaware? Right, they can move on over to Texas

And yet PE is hovering around 100. There's no two ways around this... Tesla's current value is HIGHLY speculative.

[https://www.cnbc.com/2018/01/23/teslas-pay-deal-to-keep-elon-musk-all-or-nothing.html](https://www.cnbc.com/2018/01/23/teslas-pay-deal-to-keep-elon-musk-all-or-nothing.html) >If Mr. Musk were somehow to increase the value of Tesla to $650 billion — ***a figure many experts would contend is laughably impossible*** and would make Tesla one of the five largest companies in the United States, based on current valuations — his stock award could be worth as much as $55 billion Emphasis mine, but this took me like 2 minutes to find. There's an infamous clip from CNBC or something with some talking heads basically saying the exact same thing you can find if you want.

>If Mr. Musk were somehow to increase the value of Tesla to $650 billion — ***a figure many experts would contend is laughably impossible*** and would make Tesla one of the five largest companies in the United States, based on current valuations — his stock award could be worth as much as $55 billion - [source](https://www.cnbc.com/2018/01/23/teslas-pay-deal-to-keep-elon-musk-all-or-nothing.html) Someone explain to me how all of the finance talking heads thought it was "laughably impossible" in 2018 but Reddit in 2024 seems to think the goals were "quite realistic" Someone make it make sense, because this feels like gaslighting.

"By what metrics?" the one that everyone uses to discuss company value - market cap lol

Internally, they believe that they're going to replace gas cars with autonomous robotaxis. This sub has beaten it into me over and over that we aren't supposed to just \*trust\* was Tesla execs have to say, so now we're acting like their internal growth estimates in 2018 were them looking into some crystal ball of guaranteed success? I don't really buy it..

None. There is nothing after Supreme Court so that decision would be final.

So the Tesla board would have to create a new pay package from square one?

Weak reading comprehension with snarky take that is wrong. Reddit bingo?

Of course it is. It was even more speculative back when they were unprofitable. Investors back then turned out to be right. They might be right again.

Lol these people…Elon predicts he will lead humanity to colonize mars therefore it’s basically guaranteed. Stockholders better watch out or he might get compensated for doing it

My point is that about 20% of Tesla's value is due to increasing car sales and profitability. The rest is hoping for more than just vehicle sales/efficiency growth.

Yeah pretty much but it would be much more complicated to craft package from past performance since it could be considered a gift which can't be done without 100% approval from shareholders. So any hope Musk getting anything from past performance would be pretty much gone. Obviously doesn't stop creating new package with new milestones to hit.

Tesla didn’t lose, nor a judge made a decision. That was a radical, political activist dressed as a judge who made the decision. Truly pitiful.

12%, but only if he 10x-es the market cap. It was a great deal for shareholders, but now they've received the benefit they're trying to weasel out of paying.

So the argument is that 10x-ing the market cap was known to be easily obtainable, and that makes it unfair to shareholders. Just insane.

Who cares if Elon drafted it himself. It was voted on and delivered enormous value to shareholders. >If the goals set in the package were presented as really difficult/challenging goals but in reality were easily attainable, Anyone suggesting that 10x market cap is easily obtainable for any company is just plain obtuse.

I think it’s for sure excessive, but I don’t get how you can say “insane” in how much he gets. He deserves as much as he wants to be fair. Tesla wouldn’t even exist or be around without him. He’s the damn owner, he can take as much as he wants.

I'm no lawyer but I don't really like the idea of a judge interfering with a BOD action approved by shareholders. But I think it's pretty hard to argue there's no conflict of interest when there's a guy named Kimbal Musk on the BOD.

I voted to give Elon 56 billion twice. I didn't vote to give those lawyers a dime and it was stolen from me without my consent.

Corporations have been slowly leaving Delaware for a while. Nevada, South Dakota, Wyoming, and Texas have been trying hard to draw them in

As long as some of the shareholders voted against, the law protects them from having the value of their shares threatened by unreasonable actions from the board.

If they were so attainable then why didn’t you invest at the time? As part of the deal TSLA had to hit a certain share price. This deal was a no brainier for shareholders, if musk achieved what he was incentivised to do then shares would sky rocket and the shareholders win. If not then Musk gets nothing. All CEOs should have incentive packages like this, it’s super aligned with shareholders interests.

Obviously Musk thought he could reach those goals and said so publicly. Otherwise he wouldn’t have accepted them. But the key point is that the market did not agree and all of TSLAs numbers were public.

What data wasn’t available? Their numbers are public.

The plaintiff shareholder owned less than 12 shares years ago while the majority of shareholders twice agreed the deal. In short the deal was that Musk gets 22.8 Million shares each $6.68 if he reaches 10 goals which where expected as totally unrealistic at this time. Increasing the value of the shares and the free cash of Tesla by number. This happens, Musk made the share run from 6.68 up to over 300 this days and Tesla to one of the richest companies. He over fulfilled his part of the deal and made a lot of shareholders rich. I believe that the supreme court will bring back justice into this case.

As a supporter of Musk, I agree with the court here. This level of compensation is way too much.

Well I confused by a couple of things here: 1) That shareholders would even consider diluting their shares by then $56b (now closer to $101b) and voting for this twice. Honestly if you are stupid enough to vote yes to this you should get what you deserve. Honestly I think Elon Musk have provided some wicked drugs just before the vote. 2) that a court can overrule this decision which seems crazy. But maybe it is justified since the holders were likely influenced in some way. 3) That I'm supposed to feel bad for Elon...? One of the richest men in world isn't going to get richer by an absurd amount that 99.9999% of the rest of the world can only dream of. Let me write that number out so every one can maybe understand how much this is. $101,000,000,000.00 compared to the average middle class wage in America $50,000.00. I really hope that makes you all feel really small because that dollar value is absolutely absurd and nobody deserves to be compensated by that amount. Most people would be extremely happy receiving the just the multiplier of their dream of a million dollars. Elon isn't God, and even if he was, that amount is still not justified! Every single person on earth could have recieved $12. This amount is insane.

I would like to see proof of them knowing that tesla was going to be worth what it is today. At the time, Elon was mocked for such a deal as tesla wasn't even profitable at that point.

The judge did a great job. Elon had marketing goals and did nothing to grow the company. The company is actually in worse shape now that he pushed the cyber truck through as a personal project and has failed to deliver on a half dozen promises he has made over the last 10 years. US vehicle sales have been stagnant, they have trouble competing in China and international sales aren't good either. Other than marketing and Elon hype there are no fundamental reasons for the valuation so draining money from the company will just hurt the smaller shareholders.

I love this sometimes good things do happen

You forgot highly upvoted in your bingo

And you own a Tesla that has FSD?

It really doesn’t make sense lmfao. Literally go read. One guy who owned a tiny amount that had no power or control over anything and barely the right to vote, believes that 99.99% of all shareholders and every board member and every Tesla staffer is trying to screw him over, because he owns Tesla shares. That he has undoubtedly profited from. To even think this is okay or makes sense is hilarious.

No, a Tesla that doesn’t have FSD because I’m not a sucker. Plenty of experience with it with free trials and a rental though. And even AP struggles in certain situations without radar.

Not their internal projections before the vote. The problem was the vote was filed and done against the law so is invalid, that's what the judge ruled. There's probably a reason Elon isn't asking the board to do a new package and get the process right to keep him engaged in Tesla

Frankly, it's amusing that I should 'go read'. Have you read the ruling? It's pretty rock solid and legal experts have commented that it's unlikely to be reversed on appeal. If you have a compromised board, you can't have the shareholders vote on an illegal compensation package. Tesla should have a board who take their fiduciary duty seriously.

“If you have a compromised board” is already hilarious. The person who believes the board is compromised again, is 1 guy, with no experience, who undoubtedly profited from a company’s success thanks to that companies board, shareholders, ceo, and employees. So everyone in the company or related to the company (EXCEPT 1 GUY who owned 9 shares) believes everything is good. Just to put that reminder.

Ah right, someone who doesn’t use FSD is telling people how bad it is. I’ll refute your claim, as an FSD user multiple times a day for over 100 miles per day, that it’s pretty damn good.

One guy and everyone who has ever written anything about Tesla and now a judge in Delaware believe it is compromised.

Don’t worry, He’s sponsored something now. That will make them pay 😉

How did they bill this many hours working on this?

The board lied to the shareholders and therefore any vote is null and void.

The board lied to the shareholders in both votes. There the votes are null and void.

More like the law protects lawyers who make hundreds of millions filing nuisance lawsuits.

No one outside of like 30 people at OpenAI would have predicted in early 2022 that they'd have hundreds of millions of monthly users by the end of the year. But those 30 people knew about this little project called GPT-3.5. Not everything is public.

OpenAI is not a public company. Tesla is. What datapoint did Tesla not share with investors?

We can only hope Judge Kathleen McCormick discloses all her current and previous stock holdings and investment portfolio. I’m sure we won’t find AMD, Apple, or any other automotive company or adjacent in there, surely. We can only hope she discloses all political leanings. I’m not really sure why the law doesn’t require that judges do this.

No idea. Can they also charge based on a % of the award or something? Not familiar with how all that works.

The law deems certain interests so important that if you sue someone for them and win you get attorney's fees too. It's specifically designed to ensure that the action at issue is easily accessible to plaintiffs who wish to bring suit under the statute and have a really good case. The US legal system doesn't want cost to be a barrier to lawsuit so these types of statutes make it such that they are not immediately priced out of the US legal system. It's not corrupt, it's noble and lucrative and the attorneys bear ALL the RISK.

"the benefit" was internal Tesla projections used to secure financing that they were likely to hit with or without Elon at the helm. That's the whole point of the suit.

They weren't just "attainable" ... they were internal projections Tesla used to secure financing.

But I heard in this case the lawyers lost the case but still got paid?

Plaintiff's lawyers won.

I wonder where they got that $345M number from? Such a large sum

Can you press a button and summon your car from across the country? No? Elon said you’d be able to do so 6 years ago.

A) quote and B) if exact words are quoted, then you’d means ‘you “WOULD”’

For the company? Very good. For Elon Musk this is pretty bad.

Shame they don't have a rule preventing the legal profession deciding what is a fair amount to award to lawyers as well.

Maybe I'm in a different bubble, but I would say when I tried FSD in practice it was *better* than I expected and not worse. I'm not a fan of Musk for various reasons, but various articles/etc suggest FSD usage is up from 2% of Tesla drivers to almost 50% due to the last couple years' improvements.

Anybody following Tesla knew that those goals were lofty but right within reach unless someting drastic would happen. Like an international pandemic or something.

wrong.

Nobody is stopping Tesla from giving 200 billion in shares to Elon. You just can’t overturn a judges order with a vote. Are all you morons illiterate? Do a new package give him 200 billion and take the accounting charge and get on with life

I don’t even disagree with you but read the comments and thread below, pretty much exactly that was discussed no need to call everyone morons lmao

Shareholder, not plural. ONE piece of shit went against the vote of the majority TWICE. And a judge stood by that twice.....

Yep. That's the law.

Good.  Those dumbass shareholders deserve to lose every cent for bringing about such a stupid lawsuit in the first place.

Sounds like Tesla *won* by not having to pay out several years profits to its insane despotic ruler who has long overstayed his usefulness.

I honestly don't care what Musk does. If he wants 56bn he can take it. He does the impossible with nearly all of his companies. There's not a single person in the world who's been able to achieve the results he has. It's not just setting up a software company like Microsoft or Apple, or an e-commerce business like Amazon/Alibaba. Without Musk, we probably would be kissing China's butt all year long in every area.



Are you actually claiming public quarterly filings are equivalent to the information the ceo and board have access to? Rofl. I guess there is no reason for insider trading laws.

No. I’m asking for specifics. What important data didn’t investors have access to?

Oh no! Now the richest man on earth won’t be even even the more richest man on earth. he’s going to have to live with his poultry $300+ billion. Poor fella, I hope he finds a government job to land on his feet.

Elon looks like a talking turtle in an anime.

You might as well say democracy doesn't matter.

Supreme Court will turn it over. Owners of the company, shareholders will win out at the end.

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And "internally", they think they're going to replace most of the car industry with automated 2-seater cybercabs. Are we supposed to take their astronomical projections and treat them like absolute truths in the future if they happen to come true? Especially from a legal sense?

Yep. They want those low taxes, they have to play by Delaware's rules. Musk and his kangaroo court board can get bent, Tesla has been successful in spite of Musk's meddling, not because of it.

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Oh, sorry, I messed up. That was after taxes. I have corrected that now. It is less than six times the income of 2024 (almost 5 times) but not all years have been as good as 2024 so if you average over the income of the last 5 years it looks difficult to justify IMHO.

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Well, I will take that as a well-meaning argument, one where we can both learn :) (a breed at risk of extinction today). [https://finance.yahoo.com/quote/TSLA/financials/](https://finance.yahoo.com/quote/TSLA/financials/) You need to look for "Net Income" and it's a little more than 12 billions. It includes interests though, which are not operating income (so basically they are income outside of the business of selling cars). The Operating Income is just 8.234B. Please note that this is not that bad. In fact Tesla was not doing that well before the pandemic, it was doing much worse and this represents a marked improvement. To return to what sparked this conversation that also contributes to my opinion that a remuneration package of 56B is out of line. We had some impressive performance but in what is not a consolidated market so the extra income might fluctuate in the future. The company looks solid just by looking at this sheet but IMHO 56B is a lot of money for the size of the company and to even propose that would seriously damage my trust in the upper management in a normal situation. When the payout is to a majority shareholder it does sound awfully like screwing the minority shareholders and I think that the intervention of the Law might be justified (of course it depends on details that I do not have access to as they are private communications). One thing to keep in mind is that Musk as CEO was already paid a wage and while it is normal for the industry to pay significant performance bonuses to CEOs this package represents 33 times the previous highest package ever paid according to the press which would make it somewhat exceptional. A concern I would have is that behaviour like this is that the part of the income that is not Operating Income might be damaged by an excessive payout and so that this would damage the minority shareholders also in the future and it might damage the company's future prospects by draining part of its assets.

Why should there be any limit to what a single person can earn? As long as they are not harming others liberties... why does it matter?