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by X6S1x6Okd1st 877 days ago
Did you read the article or the ruling?
3 comments

Yes I did, and I don't see sound justification for the ruling. The judge says the compensation was biased, rather than providing justification for establishing that there was too much compensation.

The judge provided a sensational quote: "Is the richest man on Earth overpaid?" - completely ignoring any business value that he has brought to Tesla, a key element in determining whether a compensation package is responsible from a fiduciary standpoint.

Nothing in the article convinces me that the ruling is just and that the judge was acting in the fiduciary interests of Tesla shareholders.

The argument boiled down to the idea that Elon already stood to make 100B by hitting the milestones, so it's more Milestone based incentives had no impact.
> completely ignoring any business value that he has brought to Tesla

According to the ruling, Musk’s lawyers failed to argue causality during trial. The judge can’t credit Musk for what Musk himself doesn’t argue.

It's not that they failed to argue causality, but they did not prove it. From II.C.b.vii (The Hindsight Defense):

> Defendants finally argue from hindsight. They claim the Grant was fair because it worked: “Tesla thrived because of the 2018 Plan.” With this argument, Defendants ask the court to infer a direct causal relationship between the Grant and Tesla’s subsequent performance. But Defendants failed to prove that Musk’s less- than-full time efforts for Tesla were solely or directly responsible for Tesla’s recent growth, or that the Grant was solely or directly responsible for Musk’s efforts. This last argument is empty rhetoric, not evidence of fair price.

The judge characterized it as “made no effort” so it’s a little of both.
Yes and it doesn’t make sense to me. They had what would be considered moonshot goals for a car company, a compensation package attached to them, and he hit the numbers. Pay the man!

How they arrived at those numbers is nowhere near as relevant as coming to an agreement and meeting the targets.

It’s the complete opposite of all the situations where the CEO burns down the office tower and jumps out the window with a golden parachute.

> coming to an agreement and meeting the targets.

That’s the crux of the whole lawsuit.

The judge found that the whole process of coming to an agreement in this case was Musk talking to a mirror.

If there were an actual fair process here and it arrived at $55B then the judge wouldn’t have found as she did.

That’s why the shareholder lawsuit was successful.

> It’s the complete opposite of all the situations where the CEO burns down the office tower and jumps out the window with a golden parachute.

Interesting observation. I wonder how we wound up at a place where all of the incentives are the exact opposite of what they should be.

It seems like you disagree with the ruling, which is different than not understanding the problem
It isn't really an article.

Did you find the ruling? Everything I saw said it was approved by a large majority, and viewed as extremely ambitious goals at the time.

> Everything I saw said it was approved by a large majority, and viewed as extremely ambitious goals at the time.

Both of these are addressed in the ruling [0]. The shareholder approval was effectively void due to material omissions, and it seems there's some dispute on how ambitious the goals actually were.

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

Not only that, but the judge found that the Board members basically had serious conflicts of interest because of their personal relationships with Musk, meaning that they were not independent representatives of shareholder interests in any meaningful sense.