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I encourage everyone to read the official filing of the compensation package in 2018 and decide if it is misleading to the investors. https://www.sec.gov/Archi

I encourage everyone to read the official filing of the compensation package in 2018 and decide if it is misleading to the investors. https://www.sec.gov/Archives/edgar/data/1318605/000119312518035345/d524719ddef14a.htm#toc524719_10 https://www.sec.gov/Archives/edgar/data/1318605/000119312518... In particular, this part: The Compensation Committee has overall responsibility for recommending to our Board the compensation of our Chief Executive Officer and determining the compensation of our other executive officers. Members of the Compensation Committee are appointed by our Board. Currently, the Compensation Committee consists of four members of our Board: Brad Buss, Robyn Denholm, Ira Ehrenpreis and Antonio Gracias, none of whom is an executive officer of Tesla, and each of whom qualifies as (i) an “independent director” under the NASDAQ Stock Market Rules and (ii) an “outside director” under Code Section 162(m).

1vuio0pswjnm7 3y ago
Indeed her decision rests on that finding. But according to the opinion, the issue was not what was included in the proxy statement, but what was left out. For example, details about those directors and their relationship with the CEO. Was that intentional? Call me crazy, but having the CEO's divorce lawyer as the General Counsel is impossible to ignore as a potential red flag. Why. There are only so many reasons he would be given the job and most of them are problematic. Was he in charge of preparing this proxy statement.
- alecco 3y ago
  https://en.wikipedia.org/wiki/Kathaleen_McCormick https://en.wikipedia.org/wiki/Kathaleen_McCormick Interesting context. (Note: I'm not from USA)
gamblor956 3y ago
Buss was the CFO of SolarCity, which Tesla acquired, and Ehrenpreis was friends with Musk at Stanford. As an employee, Buss is by definition not an independent director, see NASDAQ SMR 5605(2)(B).
YeBanKo 3y ago
Did it have a material change on the outcome of the vote? Even if the committee was designated as not independent and fully biased, the board went alone with it and the shareholder approved. The deal was clear – Tesla hits very ambitious goals, Musk gets crazy amount of money. The fact that a judge can come in and completely reverse such a decision is mind blowing and seems more like a judicial activism.
- aw1621107 3y ago
  > Did it have a material change on the outcome of the vote? Potentially, yes. Stockholders did complain about the proposed grant even with their incomplete information; who knows what they might have said if the disclosure were more complete. From the opinion: > The two largest proxy advisors, ISS and Glass Lewis, both recommended voting against the 2018 Grant. > [Specific details about the objections from ISS/Glass Lewis] > Stockholders also criticized the Grant, noting that Musk’s Tesla equity provided sufficient motivation for Musk to perform, the Grant’s size and dilutive effects were excessive, the EBITDA milestones were too low, and that linear milestones were inappropriate for an “exponential company” like Tesla. If the stockholders knew that the directors were not independent and/or that there wasn't a substantial negotiation and/or that (some of?) the planned targets were not that ambitious, then they may reasonably say no to the grant. > the board went alon[g] with it The board was not independent. There were nine directors on the board, but one left early, so that leaves 8. Elon is one and his brother another. Antonio Gracias and James Murdoch have close personal ties to Elon, and the former is also very heavily invested in Elon's businesses. Ira Ehrenpreis also has a "weighty" relationship with Elon and is also invested in Elon and Kimball's business ventures other than Tesla, though not to the same extent as Gracias. The first 3 (Kimball, Gracias, and Murdoch) were determined to lack independence from Musk due to their close personal relatioship - 4 out of 8, and that doesn't include Ehrenpreis' personal ties. In addition, the judge found that the board didn't act independently either. Some of the members themselves testified that they were working together with Musk during the negotiations - hardly a sign of acting independently of their personal ties. > and the shareholder approved That was determined to be irrelevant due to Tesla making material omissions in the proxy statement before the vote. > The fact that a judge can come in and completely reverse such a decision is mind blowing and seems more like a judicial activism. That's the law. If you break the rules it's not unreasonable to be prevented from reaping the rewards of doing so.
nocoiner 3y ago
Oh, excellent catch - agreed, Gracias, Buss, and probably Ehrenpreis and perhaps Denholm are, at best, questionably independent (and for a couple of them quite clearly not independent). Also agreed that this is the crux of the reasons why the pay package was so problematic.
- melling 3y ago
  Remember when you said Meta wasn’t a good buy? “ Why is that an incredible investment opportunity? Something like ~53% of the voting power is owned or controlled by Zuck, and there’s no indication that he has any plans to meaningfully return money to shareholders,* rather than continuing to write ten-digit company checks every month to fund the metaverse. If you want to buy META as a bet on Zuck himself or the success of their conception of the metaverse, that’s one thing, but I don’t see how this is a reasonable value investment based on their current management and capital structure. * I know Meta has done stock buy-backs from time to time, which are of course economically equivalent to a dividend (except more tax efficient), but from eyeballing their history of repurchases, it looks like they, like many issuers, managed to set billions of dollars of shareholder money on fire by repurchasing the stock while it was trading at rich multiples.”
  - nocoiner 3y ago
    There is definitely a reason why I post that junk to the internet and don’t try to make a living making investment decisions.
    - melling 3y ago
      Why post junk at all? I’m here to learn.

1vuio0pswjnm7 3y ago

Indeed her decision rests on that finding. But according to the opinion, the issue was not what was included in the proxy statement, but what was left out. For example, details about those directors and their relationship with the CEO. Was that intentional? Call me crazy, but having the CEO's divorce lawyer as the General Counsel is impossible to ignore as a potential red flag. Why. There are only so many reasons he would be given the job and most of them are problematic. Was he in charge of preparing this proxy statement.

alecco 3y ago
https://en.wikipedia.org/wiki/Kathaleen_McCormick https://en.wikipedia.org/wiki/Kathaleen_McCormick Interesting context. (Note: I'm not from USA)

gamblor956 3y ago

Buss was the CFO of SolarCity, which Tesla acquired, and Ehrenpreis was friends with Musk at Stanford. As an employee, Buss is by definition not an independent director, see NASDAQ SMR 5605(2)(B).

YeBanKo 3y ago

Did it have a material change on the outcome of the vote? Even if the committee was designated as not independent and fully biased, the board went alone with it and the shareholder approved. The deal was clear – Tesla hits very ambitious goals, Musk gets crazy amount of money. The fact that a judge can come in and completely reverse such a decision is mind blowing and seems more like a judicial activism.

aw1621107 3y ago
> Did it have a material change on the outcome of the vote? Potentially, yes. Stockholders did complain about the proposed grant even with their incomplete information; who knows what they might have said if the disclosure were more complete. From the opinion: > The two largest proxy advisors, ISS and Glass Lewis, both recommended voting against the 2018 Grant. > [Specific details about the objections from ISS/Glass Lewis] > Stockholders also criticized the Grant, noting that Musk’s Tesla equity provided sufficient motivation for Musk to perform, the Grant’s size and dilutive effects were excessive, the EBITDA milestones were too low, and that linear milestones were inappropriate for an “exponential company” like Tesla. If the stockholders knew that the directors were not independent and/or that there wasn't a substantial negotiation and/or that (some of?) the planned targets were not that ambitious, then they may reasonably say no to the grant. > the board went alon[g] with it The board was not independent. There were nine directors on the board, but one left early, so that leaves 8. Elon is one and his brother another. Antonio Gracias and James Murdoch have close personal ties to Elon, and the former is also very heavily invested in Elon's businesses. Ira Ehrenpreis also has a "weighty" relationship with Elon and is also invested in Elon and Kimball's business ventures other than Tesla, though not to the same extent as Gracias. The first 3 (Kimball, Gracias, and Murdoch) were determined to lack independence from Musk due to their close personal relatioship - 4 out of 8, and that doesn't include Ehrenpreis' personal ties. In addition, the judge found that the board didn't act independently either. Some of the members themselves testified that they were working together with Musk during the negotiations - hardly a sign of acting independently of their personal ties. > and the shareholder approved That was determined to be irrelevant due to Tesla making material omissions in the proxy statement before the vote. > The fact that a judge can come in and completely reverse such a decision is mind blowing and seems more like a judicial activism. That's the law. If you break the rules it's not unreasonable to be prevented from reaping the rewards of doing so.

nocoiner 3y ago

Oh, excellent catch - agreed, Gracias, Buss, and probably Ehrenpreis and perhaps Denholm are, at best, questionably independent (and for a couple of them quite clearly not independent). Also agreed that this is the crux of the reasons why the pay package was so problematic.

melling 3y ago
Remember when you said Meta wasn’t a good buy? “ Why is that an incredible investment opportunity? Something like ~53% of the voting power is owned or controlled by Zuck, and there’s no indication that he has any plans to meaningfully return money to shareholders,* rather than continuing to write ten-digit company checks every month to fund the metaverse. If you want to buy META as a bet on Zuck himself or the success of their conception of the metaverse, that’s one thing, but I don’t see how this is a reasonable value investment based on their current management and capital structure. * I know Meta has done stock buy-backs from time to time, which are of course economically equivalent to a dividend (except more tax efficient), but from eyeballing their history of repurchases, it looks like they, like many issuers, managed to set billions of dollars of shareholder money on fire by repurchasing the stock while it was trading at rich multiples.”
- nocoiner 3y ago
  There is definitely a reason why I post that junk to the internet and don’t try to make a living making investment decisions.
  - melling 3y ago
    Why post junk at all? I’m here to learn.