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I think you have the wrong idea of what happened, and you should consider reading McCormick's ruling and the trial records if you want to understand what actual

I think you have the wrong idea of what happened, and you should consider reading McCormick's ruling and the trial records if you want to understand what actually happened. Regarding board composition: The board of directors of a company is elected through a process that involves nomination by management, and then an approval of the shareholders. An abstention in this vote is treated as a vote with management. When management owns 25% of the votes in a company, it only takes a few abstainers to keep their butts in the seats. Board elections are also very slow, with a few directors being elected every few years, so it can take 10 years to completely replace a board. Tesla's board of directors is not generally comprised of "titans of industry" but of people who owe Musk their success - are you reading the same list that I am? "Titan of industry" Kimball Musk? JB Straubel whose only accomplishments are Tesla-related? Or are you referring to nepo baby James Murdoch? Or the two VCs whose firms are only successful because of an early investment in Tesla? If you want to see a board comprised of actual titans of industry, look at Google, Nvidia, Meta, and others. The board also said, during the process of setting his compensation, that it was more of a "collaboration" and less of a "negotiation." And Tesla's internal projections suggested that the company would have hit most of those "aggressive" targets with a potted plant as CEO. Just read the primary sources relevant to the case, and not just Tesla's statements. Suffice it to say that most of the world, including all the people who matter, disagrees with your read on the situation.

refurb 3y ago
Oh I've read the decision and understand why the court decided what they did. It just doesn't doesn't seem like that strong of an argument. And some of the criticisms of independence seem weak. "Known each other for 15 years?" I mean if I meet someone in 2008, may grab lunch a dozen times in between, I "know them". Am I beholden? And titans? CEO of 21st Century Fox? Was he "hoodwinked"? And some of these people sat on the board for years, received compensation through stock grants, and the court says "they made $X million, so must be beholden to Musk". Does that mean boards need to be recycled every time they get paid lest they become "beholden"? But that said, the court's decision was about the negotiation. Shareholders still had a choice to approve the compensation package. In fact, for institutional investors, it was their fiduciary duty to do so. So your comment about the "abstention" just gets to that point - either shareholders decided they didn't care (ok) or they delegate their decision to the board (ok) or were negligent in their duties. And the court's decision hinges on the idea that Musk was a "controlling shareholder", while only holding 21% of shares. The courts will decide what the courts will, but the complaint comes across as "I never thought you would hit those targets, but now that you have, I want to reneg". I mean had Tesla gone belly up would they have complained about the compensation package? > that most of the world...disagrees with you take Well thankfully their opinions, like my own or yours, don't really matter, am I right? We'll see how the appeal court feels with this judge's opinion of "This decision dares to “boldly go where no man has gone before,”2 or at least where no Delaware courthas tread."
- pclmulqdq 3y ago
  I am not aware of a ruling of the Delaware chancery court ever getting overturned. They are good at what they do. And Delaware has ruled on and struck down CEO pay packages before. This isn't uncharted territory. I also think it's clear that you're confused about the legal structure here, and you probably should read some more things about the case given your interest. Shareholders have no fiduciary duty to do anything, and nobody is saying that the board was "hoodwinked." They were aligned with Musk on this when they should not have been, and worked against the interests of shareholders. The board is supposed to have a fiduciary duty to the shareholders, which they apparently are not taking seriously. The CEO reports to the board who reports to the shareholders, not the other way around.
  - refurb 3y ago
    > And Delaware has ruled on and struck down CEO pay packages before. This isn't uncharted territory. The judge literally said it's unprecedented. That's why I quoted it. > Shareholders have no fiduciary duty to do anything, and nobody is saying that the board was "hoodwinked." Institutional investors have a fiduciary duty to their investors. Again, the largest shareholders were massive financial firms who represented millions of shareholders. They absolutely do have a fiduciary duty to fully evaluate a CEO pay package and use their very significant voting power. The only possible reasons they voted for it: a) they agreed with it, b) they didn't care or c) they failed to uphold their fiduciary duty. Do note that the pay package passed with 73% of shareholders (who voted).
    - pclmulqdq 3y ago
      The judge said that the pay package was unprecedented, not the ruling.

refurb 3y ago

Oh I've read the decision and understand why the court decided what they did. It just doesn't doesn't seem like that strong of an argument. And some of the criticisms of independence seem weak. "Known each other for 15 years?" I mean if I meet someone in 2008, may grab lunch a dozen times in between, I "know them". Am I beholden? And titans? CEO of 21st Century Fox? Was he "hoodwinked"? And some of these people sat on the board for years, received compensation through stock grants, and the court says "they made $X million, so must be beholden to Musk". Does that mean boards need to be recycled every time they get paid lest they become "beholden"? But that said, the court's decision was about the negotiation. Shareholders still had a choice to approve the compensation package. In fact, for institutional investors, it was their fiduciary duty to do so. So your comment about the "abstention" just gets to that point - either shareholders decided they didn't care (ok) or they delegate their decision to the board (ok) or were negligent in their duties. And the court's decision hinges on the idea that Musk was a "controlling shareholder", while only holding 21% of shares. The courts will decide what the courts will, but the complaint comes across as "I never thought you would hit those targets, but now that you have, I want to reneg". I mean had Tesla gone belly up would they have complained about the compensation package? > that most of the world...disagrees with you take Well thankfully their opinions, like my own or yours, don't really matter, am I right? We'll see how the appeal court feels with this judge's opinion of "This decision dares to “boldly go where no man has gone before,”2 or at least where no Delaware courthas tread."

pclmulqdq 3y ago
I am not aware of a ruling of the Delaware chancery court ever getting overturned. They are good at what they do. And Delaware has ruled on and struck down CEO pay packages before. This isn't uncharted territory. I also think it's clear that you're confused about the legal structure here, and you probably should read some more things about the case given your interest. Shareholders have no fiduciary duty to do anything, and nobody is saying that the board was "hoodwinked." They were aligned with Musk on this when they should not have been, and worked against the interests of shareholders. The board is supposed to have a fiduciary duty to the shareholders, which they apparently are not taking seriously. The CEO reports to the board who reports to the shareholders, not the other way around.
- refurb 3y ago
  > And Delaware has ruled on and struck down CEO pay packages before. This isn't uncharted territory. The judge literally said it's unprecedented. That's why I quoted it. > Shareholders have no fiduciary duty to do anything, and nobody is saying that the board was "hoodwinked." Institutional investors have a fiduciary duty to their investors. Again, the largest shareholders were massive financial firms who represented millions of shareholders. They absolutely do have a fiduciary duty to fully evaluate a CEO pay package and use their very significant voting power. The only possible reasons they voted for it: a) they agreed with it, b) they didn't care or c) they failed to uphold their fiduciary duty. Do note that the pay package passed with 73% of shareholders (who voted).
  - pclmulqdq 3y ago
    The judge said that the pay package was unprecedented, not the ruling.