Tesla will moves its state of incorporation from Delaware to Texas. This will be approved by shareholders.
Corporate license fees accounted for 12.1 percent of Delaware’s state and local general revenue in 2021. The license fees are $1,814 per capita. 60% of the Fortune 500 are incorporated in Delaware. Delaware’s combined state and local general revenues were $15.0 billion in FY 2021, or $14,950 per capita. IF many other companies see the Delaware ruling as indicating that Delaware business treatment is not predictable then there could be many other companies changing incorporation to Texas or Nevada. This could potentially cost Delaware up to 12% of its tax base.
There will be a new CEO compensation replacing the 2018 rescinded compensation plan. This will again be approved by shareholders. There will also be a new compensation plan for Elon which will address getting voting control up to 25% of the company.
Tesla will appeal the old ruling in Delaware to the Delaware Supreme Court and will fight any $5 billion award to the law firm. This could potentially take a long time to resolve. However, it will be mainly over the matter of not allowing the law firm to profit and cost Tesla shareholders. The theoretical claimed purpose of the ruling rescinding the CEO compensation package was to protect Tesla shareholders who voted in favor by 81% in 2018. The CEO compensation package only started awarding any options after the stock price doubled and then fully was fulfilled when the stock price increased by 10 times. The package started when Tesla was at risk of going bankrupt with difficulties with the Model 3 ramp.
The public vote is unequivocally in favor of Texas!
Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas. https://t.co/ParwqQvS3d
— Elon Musk (@elonmusk) February 1, 2024
Volunteer Tesla shareholders with over 420,000 combined Tesla shares are working to draft new CEO compensation plans to provide input to the Tesla Board. This is to counter the claims of the plaintiff with 9 shares, the law firm and the judge of the Delaware Chancery that the Tesla shareholders were not fully informed or aware of the CEO compensation plan details and the relationships inside Tesla.
It's unbelievable, lol.
90 devoted shareholders have already contacted us and filled out the form and the share count of all together tonight is … (drumrolls) https://t.co/e3rs5eMUvM pic.twitter.com/pRUP5trKvL— Ale𝕏andra Merz (@TeslaBoomerMama) February 1, 2024
Aggressive opinion:
Tesla should move it’s corporate location to Texas BEFORE acting on Elon’s compensation
It’s the surest way to get review of the package away from this bad judge
— Warren Redlich – Chasing Dreams (@WR4NYGov) February 1, 2024
I remember this morning very well. I had spoken to @elonmusk by phone earlier and written a column in @nytimes for that morning and then went on the air with the news. The truth is I thought the comp plan was the most “skin in the game” in history. I still do. I have criticized… https://t.co/xsIVGB5kQa
— Andrew Ross Sorkin (@andrewrsorkin) February 1, 2024
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.
Before you all jump up and down to pay Musk billions more in diluted stock compensation, you might want to consider that Tesla stock is for more than 3 years. Yes, really, it’s at the same level it was in Dec. 2020. Musk undoubtedly knows he hasn’t made money on his stock since then too, not to mention the way over-priced payment for Twitter/X. How will it help the average shareholder to provide Musk with allow-priced options that other shareholders will only see dilution from?
What dilution?
“… gave him stock options to purchase Tesla stock at a heavily discounted price and the stock could not be sold for another 5 yrs after exercising the options to prevent an “exercise & run”.”
He has still exercised none of the options, so the 5yr lock up hasn’t even started.
And why in the world should he be penalized for hitting all targets 6-7 yrs early (it’s a 10 year contract), and then dealing with substantial volatility that comes with being the world’s (intermittently) most valuable company? If I were a shareholder, I’d be glad he’s more focused on long-term value than short term share price targets. The world needs more CEO’s at least a little more like Elon.
A judge is the ultimate unbiased authority, she would NEVER bring her liberal views into her court room. 🙃
Could it be that Elon was actually hoping for this outcome, as a path to get to 25%? He said that he’d take voting-only shares to satisfy his desire for control, and I believe he said he was told that such wasn’t allowable under Delaware law.
The interference by a biased judge was not the desired option. He can just get another CEO package and it would be moving from 20% to 25%. Now it is from 14% to 25%. Plus the risk of $5-7 billion for the class action law firm.
This ruling makes me sick. This is what happens in the third world. It is clear that the judge looked at politics and not the law. Elon should move to TX, appeal to Delaware supreme court and stick the people who sued him with his legal fees. In the meantime he can use the bully pulpit to get people to reincorporate out of Delaware.
To paraphrase Winston Churchill the time has come to bounce the rubble. The only thing that proponents of lawfare understand is losing and getting a bill from the defense.
How to explain why someone would want more than 1 billion dollars of compensation? Maybe Elon has big plans for the future he needs money to finance. His plans thus far have been both grand and of benefit to us all.
I’m for it.
His compensation plan was he makes Tesla worth $650 billion or he gets nothing. The board agreed to it. The shareholders agreed to it. Elon delivered and should be paid as everyone agreed. If Elon didn’t deliver then he would have gotten nothing.
Your thoughts on how much he should be paid are irrelevant and the judge is showing why the USA is becoming a low trust society third world country where judges rule not on the basis of the case in front of them but on the politics of the defendant and plaintiff. Want to know how the courts will likely rule? Check the politics of the people in the courtroom.
Elon Will Move Tesla Incorporation to Texas Then Get a New CEO Compensation Plan
OR he could actually LISTEN to what the judge said and redo the SAME compensation package BUT with more transparency to the share holders.
ALL the judge said was that that the original compensation package was NOT adequately given to the share holders. The board members relationships with Elon were NOT properly represented nor was there ANY proper representation of fiscal responsibility by the board to LIMIT his compensation. The board is NOT a ‘good boys’ club there to hand out money to Elon, It NEEDS to show that it is representing the interest of the share holders in NOT wasting money.
Someone PLEASE explain how paying ANYONE **MORE** than one billion dollars a year is somehow going to get them to work harder or more.
Also if Elon want more voting control then he is welcome to requesting individual stock holder to allow him to use their share’s voting rights. I have no problem allowing him to exercise the voting rights of my shares.
Elon has a $1 salary. That’s how much “money” being “hand(ed) out to Elon.” That his compensation package is made up entirely of TSLA options is exactly the correct way to get someone to “work harder or more,” because if he tanks TSLA, his compensation (current, future, and FORMER) are all wiped out.
As a shareholder I don’t need to know much more than
1) 100% of compensation (within a rounding error) is in TSLA options
2) There’s no golden parachute
VOTE YES DUH!
Can we make this mandatory for all large company CEO packages? I’m too libertarian to want the gov to mandate that, but it sounds like utopia to me.
As for your “solution” to his voting control issue. Will you guarantee to hold your shares forever and maintain his voting rights perpetually? Word on the street is he want’s enough voting control to prevent Tesla AI work from doing an OpenAI on him again. Perhaps the Texas compensation package will include some options with greater voting rights, but are non-transferrable (or at least the voting rights are).