Back in 2018, the board of electric car company Tesla approved a massive pay deal for CEO Elon Musk: $56 billion in stock, to be granted over 10 years if the company hit performance goals laid out in the agreement. But a shareholder sued over the deal, saying that Musk had too much influence over the board, and that the company hadn’t disclosed Musk’s close ties to board members. It probably didn’t help that Musk demanded board members let him hold their children hostage in his secret lair inside an undisclosed dormant volcano, either.
A judge in Delaware agreed with the shareholder earlier this year and voided the agreement, ruling that it was extravagantly unfair to stockholders because, as she wrote, “Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf.”
That ruling quashed the “unfathomable” compensation package and freed not only the boardmembers’ offspring but several secret agents who were about to be consumed by sharks with defective brain implants. (Musk was allowed to keep the giant red LED countdown timer, frozen at “00:00:01,” because the man loves a cliché.)
Now, Tesla is once again asking shareholders to re-approve basically the same pay agreement that the judge threw out, with some technical changes to add transparency to the thing.
That’s raising some eyebrows, hackles, and put options, since Tesla sales are actually in a slump lately, compared to the rest of the EV market, which has seen slower growth but is still expanding. First-quarter 2024 Tesla sales are down 20 percent from the final quarter of 2023. On top of that, Musk earlier this month reportedly decided to cancel the Model 2, a planned compact EV that would sell for around $25,000, in favor of focusing on Tesla’s self-driving vehicle business. That caused Tesla’s stock value to dip, although it recovered when Musk tweeted “Reuters is lying” — but without any details on what was actually going on.
On Monday, Tesla laid off a tenth of its workforce, about 14,000 human beings, so even purists will let you say Elon is decimating the company, and Reuters now reports that, with no firm word on what’s up or down with the Model 2, Wall Street is feeling jittery about the company, like when a Tesla on “autopilot” blasts through a T intersection and plows into a cornfield. You know, hypothetically.
The vote will be held at Tesla’s annual meeting on June 13, and the company also wants shareholders to declare Texas its new corporate home, which as we understand may involve arcane blood rituals in both Delaware and Texas, and probably a notary.
In a letter to shareholders that was released as part of a regulatory filing yesterday, board chair Robyn Denholm explained that Musk had indeed met all the performance goals in the compensation agreement shareholders agreed to in 2018, and the company’s shares are up 571 percent since then. So as Laurie Anderson said, pay him what you owe him (she wasn’t talking about Musk).
“Because the Delaware Court second-guessed your decision, Elon has not been paid for any of his work for Tesla for the past six years that has helped to generate significant growth and stockholder value,” Denholm wrote. “That strikes us — and the many stockholders from whom we already have heard — as fundamentally unfair, and inconsistent with the will of the stockholders who voted for it.”
“Please, for the love of God, give the man what he wants. I only want to breathe fresh, unrecycled air and walk under the sun again,” Denholm might have added but probably did not.
The AP notes that even if shareholders vote to approve the pay package and move the company to Texas, any legal quibbles would still be subject to Delaware courts since that’s where the company will still be incorporated when the vote is taken.
If shareholders vote it down, Tesla may be looking for a new CEO, causing uncertainty and financial jitters that are worse than those endemic to having an executive officer who’s like a Bond villain, but without a Persian cat, and stupid too.
Tesla said it’s going for ratification of the earlier agreement instead of negotiating a new compensation package for Musk, since keeping him on board would undoubtedly cost about the same anyway.
Because it’s trying for ratification instead of a new plan, Tesla said it “did not substantively re-evaluate the amount or term” of the package and did not hire another compensation consultant to weigh in on it.
Musk has also been on his social network, X, which is like Twitter but with more Nazis, demanding that if he doesn’t own at least 25 percent of the company (instead of the 20.5 percent ownership he has now), he may just decide to partner with some company other than Tesla to develop his Next Big Things, like AI and robots and a device enabling cats to grow opposable thumbs and take over Belgium (as if they’d stop there, foolish hu-mon). You shareholders wouldn’t want that, now would you?
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If a monkey hoarded more bananas than it could eat, while most of the other monkeys starved, scientists would study that monkey to figure out what was wrong with it.
When humans do it, we put them on the cover of Forbes.
No one human being is worth $56,000,000,000 to a company.
You want to improve Tesla, pay your new CEO 1/10th of that, take the rest of the money and invest in more and better engineers and quality. Stop with the novelty bullshit like cybertrucks. Build a product revered by buyers, enthusiasts, and critics for being a solid car with a long lifespan, easy maintenance, and long battery life.