Elon Musk Pay Deal Voided - Should Tesla Reincorporate in Texas?
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A Delaware court this week voided Elon Musk’s $55.8 billion dollar pay deal with Tesla. The voiding of these stock options erases about a quarter of Musk’s current wealth.
The judgement came in response to a shareholder lawsuit launched by Richard Tornetta who owned nine shares in the company. Judge Kathaleen McCormick found Tesla directors, who negotiated the pay package, were "perhaps starry eyed" due to Musk's "superstar appeal" and did not adequately inform shareholders.
Elon Musk announced after the judgement that he would seek to reincorporate Tesla in Texas, a state that he believes could be more hospitable to his way of doing business than Delaware. We’ll dig into whether that would work near the end of the video.
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Bad Judge
Is there a reason you direct so much dissent towards America?
Musk is an actor like his mother, just he acts the role of a CEO.
All the big money and assets are held in trusts by the Car tel - have you ever seen billions go to the family once they pass??
I love the irony of being interrupted from your carefully curated video, Patrick, to see an AI generated video of Elon Musk promoting a pump and dump crypto scam 😂
Would the real Elon Musk please stand up? 😅
(I'm sure a part of you is dying, Patrick, knowing that Google, one of the most powerful companies in the world, is riding on your popularity to grift your followers with the very crypto scams you uncover) 🤪
The judge obviously voted for Biden
"This was above minimum wage at the time" was one of several very good jokes.
So dry I need to take eye drops.
@@biledemon85 so arid it arguably contributed to global warming.
Thanks Captain Obvious
Except that it isn't the truth. The incentive package was universally viewed as insane and completely unachievable. All analysts thought Musk would work for free.
@@MattCasters But the cash bonus of $2 million (which was above the minimum wage) was paid to Nelson Peltz, not Elon Musk, so I don't see how you can claim it isn't the truth.
"a salary of $1 a year, which was below minimum wage at the time"
But he did receive a cash bonus of $2 million which which was above minimum wage
And some sweet perks.
If you're talking about Steve Jobs, he took a dollar a year but received 90 million jet. I wonder what that be today and today's dollars. I'll take $1 a year if I can get a 90 million jet out of it.
@@danliddiard Company jet, plus new car every year & a security detail
...and free preview versions of Apple's latest tech, no need to wait in lines at Apple stores
TIL minimum wage in 1993 was between $1 and $2 million per year. Fascinating!
In Ireland there was young people earning a lot less than that and were glad to get the job as there was far more not earning.
Guess that makes it okay then.
If a business is too loose for Delaware, you got problems
As a non US citizen I hope that I don't cause offence, but if a business is too loose for the USA, you've got a problem. In most countries around the world, Musk would still be in jail
for his Tweet to go private.
what are you talking about? jail for a buyout? @@davidbrayshaw3529
Stealth fraud artist. 😂
@@DCGreenZone Stealth?
@@hendrikd2113 Perhaps, the dozens if not hundreds of YT videos crediting him with the axial flux motor, (Elon just revealed and so forth) videos crediting him with BYD Blade Batteries, Sodium Ion Batteries, Sulfur Ion Batteries, and many many more tech advances he had nothing to do with.... makes me wonder who is behind all those videos. I've blocked most of those channels, one sneaks through now and again.
20:10 "after all man cannot live on Stock options alone"😂😂😂😂 well played Patrick, well played 👏🏽👏🏽
LOL
Especially underwater stock options.
Well, you can turn option into stocks and then either live off the dividend or just sell some of them.
Stock options are worth money even if they are currently under water, but I guess some or most of these option grants are not transferable.
😂😂
Here are some numbers just to put 55.8 billion dollars into perspective:
The cost of the Burj Khalifa, the tallest building in the world: ~1,5B
You could buy more than 35 Burj Khalifas for Elon's compensation package.
The GDP of Iceland: ~26B
You could buy 2 years of Iceland's total economic output for Elon's compensation package.
Nintendo's profits from all Mario games ever sold: ~45B.
Elon's compensation package is bigger than 40+ years of profits from arguably the most iconic video game series in existence.
The compensation package of Stephen Schwarzman, head of Blackstone and one of the highest paid CEOs in America: ~253M
Stephen Schwarzman would have to work for over 200 years at his current income to reach the same level as Elon's compensation package.
burj khalifa cost that because they used slave labour
@@emilesmithrowe8353
Good point.
Probably should have used the 4.75B cost of the Large Hadron Collider, the biggest and most complex machine ever constructed, as a more fitting example
@@emilesmithrowe8353 as an Apartheid-era emerald-mine heir, Elon would know a lot about that probably
Lol. And the burg k don't have plumbing!
I don't get it. You can't build anything without cash, which stock options aren't. Games profits are revenues and GDP is irrelevant. I don't think you understand finance.
Phillip.
Getting paid with options sounds like a infinite leverage glitch
If you do a good job, yes.
@@matiashamalainen7965Just as much if you don't. Leverage goes both ways.
@@matiashamalainen7965 Doing a good job is immaterial if you've got the board in your back pocket, examples of which abound in the video.
pump and dump, make it look like you are doing a good job, just long enough to unload your soon to be trash.@@matiashamalainen7965
It's theft from the other shareholders.
It's inflation of the shares.
Not at all different to the Mafia skimming from retirement funds of the Teamsters.
Investment funds, and index finds that hold stock are essentially ripped off when executives grant themselves massive pay and stock options.
It's simply theft.
$19 billion for being a lawyer. Talk about obscene!
The most funny portion of it, at least for me, is that the guy leading this lawsuit only had 9 shares.
Ironic, isn't it? Tesla shareholders should sue and have them paid $350 per hour. See how the lawyers like that result.
@@MrSomsoc Elon must not have the correct politics.
Maybe he should be paid his share of the ultimate award and leave everyone else out of it. The lawyers can take 3 shares worth.
It's just as obscene as a CEO taking whatever he wants out the company.
Everyone loves getting paid on commission as long as it's not out of their pocket
Cult of personality, whether in business, politics or pop culture, is the reason we’re in this mess.
Charismatic leaders have and will always exist. Get over it
@@JaviEngineerbut people shouldn't be so over his heel
If they just say they like his vision then that's ok
But they put him on a pedestal so high
Like he is some Messiah who will save humankind
When he is just a person who just had good vision to own stocks in a good company
@JaviEngineer You seem to be the one whining and bitching like a woman
@JaviEngineer You seem to be the one whining and bitching like a woman
@Asunnybeach like it or not, if it wasn't for Elon Musk, we wouldn't have the rise of electric cars and reusable rockets. Us investors WANT Musk to be compensated properly for the stock and business increases he was most certainly responsible for. We WANT him to stay on board to push the compact, semi, and so many other Tesla projects forward. As such, very simply, we'll vote for another lucrative package but preferably out of the reach of Biden in Delaware.
This bizarre trend of overpaying CEOs has essentially become circular (and nearly tautological) in its justification. A well paid CEO is well paid because CEOs at good companies should be paid well, so obviously if you're paying your CEO well it means you're a good company. That's how that works, right?
Sadly, yes. Pathetic, but everyone else playing the game expects to reap the same rewards so there’s no incentive except for things to go up.
What's a "good company"? It is a very difficult thing to define when you really sit down and think about it.
@@davidbrayshaw3529 Sure, but there are reasonable measurements you could propose for determining if a company is good, and bad measurements. And "how much money are your executives paid" is one of the absolute worst ways to determine if a company is good or not.
@@sgttomas Then it sounds like the rules of the game need to change.
@@Mrinsecure that’s what we said in the 90s. Rage Against the Machine! Then people get older and make different choices. ….i think this has always been and always will be the game we play. Find a different path for yourself and leave the others to do their thing, is all you can do, I think 🤔
Once worked at a Logistics centre in UK that had a contract to distribute a US product that had a shelf life. The US managers of the company in the UK would change regularly after all falling into the quarterly reporting trap. The stuff was pushed out to retailers on sale or return to manage the reporting then a chunk would come back as it passed it's sell by date and the manager would be fired, rinse and repeat until they gave up on the UK market as unprofitable....
Hot potato management, been there (as a lowly programmer) and it was unpleasant place to be.
Imagine if you as a worker argued you needed extra compensation and a stake in the business to properly do your job.
Exactly.
In software this is actually very common for ordinary engineers, especially startups.
I mean have you ever heard of asking for a raise or negotiating salaries? If people haven't then they should try. It helps you a lot in earning more money.
Better yet, imagine if you (as a worker) went out and started your OWN 1/2 a trillion-dollar company ...
Tesla offers a generous stock option plan to all the employees.
Common Sense Skeptic is a great channel, good on you for mentioning them.
Nice 👍🏻
I will second this. They do great work and should be recognized for it
it's garbage.
If you dislike fact checking the powerful 🤷 @@---jj9lf
Here here!
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Elon Musk: Am considering taking Tesla private at $420. Funding secured.
😅
You think? Hqve you seen the state of the financial markets right now? He would have to buy out shareholders to do it, and he doesnt have that much cash. No collateral, no loan. If he takes it private, he would have to put up his shares and other assets as collateral to get the money. He can reincorporate in Texas, but it doesnt mean his problems would go away. He lacks credibility, especially as he and the board lied by omission, by not revealing the whole deal, which would devalue the value of their shares. He showed how much regard he has for his shareholders. And the smart ones will pay attention to that.
Musk is Tesla and this is Biden’s administration getting back at him for talking out against Biden, don’t kid yourself. Biden’s administration is like Nazi Germany, speak out and we will bankrupt you!
v funny. Elon a victim of his own sense of humor. The biggest joke of all is that it wasn't a joke at all. He was deadly serious. The Saudis just changed their mind.
Elon Musk hit with fraud suit after admitting to SEC he said Tesla would go private at $420 a share in 2018, because he thought his then pop star girlfriend Grimes would find it funny.
@@BigHenForDo you honestly not know about the 420 tweet?
Gotta love the corporate culture where the captains of the ship are hugely rewarded for merely doing their jobs, while all the success of the company gets attributed to them. At the same time whenever a company is doing badly, its always someone else's fault and the supposed captains of the ship never take responsibility of anything, in fact they're often the first ones on the lifeboats when they ground their metaphorical ships on the rocks.
First thing companies do when they're in trouble is lay off employees. They even do it when times are good but growth is slow. You never hear anyone say "We had a bad quarter, time to cut costs by firing the CEO."
“We laid off the staff. This was so stressful to us that we had to take a bonus to unwind”
This may be a characteristic of human nature. Have you ever seen a politician accept responsibility for anything negative?
100%
Your comment doesn't apply to Musk. He pulled this company out of the fire. It was the most shorted stock in history at the time and he 10x'd the stock price. You don't do that by merely "doing his job". He performed a miracle. And he should get what he was legally promised.
“Dear shareholder,
Let me tell you why paying more corporate taxes and myself is a win-win for you….”
You would think that more shareholders would have had a problem with the pay package than an obviously manipulated 9 share holder
@@TheAnonymousOne67 The stock price 10x, why would I have a problem?
I don't think this clown understands how Elon's compensation was structured. Morons coming up with simple minded conclusions based on their shallow understanding of events. Typical youtube morons.
@@andrewandersson You shouldn't
Tesla shareholders are like no other. Elon's $55b compensation package works out to the equivalent of $17 per share. Of course, Musk still owns about 176 million of those which means if dividends were paid to all shareholders out of Musk's renumeration package, he'd still be in for just under a $3 billion payday.
But why would any shareholder want dividends when the CEO can take the lot? That's the way Tesla shareholders think. Rather than banking a $17,000 check based on the 1000 or so shares that they own, they'd rather give it away to their esteemed leader. But Tesla is not a cult. I want to make that clear. Tesla is not a cult.
Musk is playing a wonderful game of "let's see who has bigger balls" and sadly the only ones who will feel the pain are the ones who believe in him unconditionally.
Obscene doesn't even begin to describe this situation.
Cheap money from the central bank inflates stock prices, what should we expect? What a waste to civilization
I hope you're talking about the fact it was voided.
Because Musk's pay was based on specific targets - growing Tesla to a $600bn valuation, which he managed to do.
If he had failed in that his compensation would've been basically nothing. So he gambled and succeeded and now he's being punished for it.
Thats disgusting.
@@MA-go7ee nonsense
@MA-go7ee
Awww, poor billionaires.
Why would you argue for somebody who considers you and everybody like you as utterly disgusting and would never associate with you? Arguing for billionaires will never make you one of them, it will make you into fresh meat ready to be metaphorically devoured by them, if they ever notice you at all.
Unfair or not is irrelevant. You will never be one of them. You'll stay poor and angry. You're not a temporarily embarrassed millionaire, you're sitting in an eternal hamster wheel and will never reach your goal.
@@MA-go7eeso he gets pay equal to 9% of the valuation ... In what world is that an efficient use of resources?
How the lawyers in this case get paid seems to give rise to perverse incentives too. Some enterprising lawyers might try to get some random shareholder (possibly by paying him) with 1 share to start a case just so that they can reap huge sums of money if they win.
Do you think lawyers who can command such fees are interested in ambulance chasing? There is no compensation payable in this case to the plaintiff.
True but here we have a court that makes the actual decision so a lawyer only does that if they think it's actually wrong.
You can invest in lawsuits like this. This how all those class actions against your credit card company are born.
@@tomlxyz The payout here is truly enormous, especially compared to the harm suffered by the guy with 9 shares. Considering that, many lawyers might want to try to litigate cases like this even if they think their chances of winning are small; the expected payout would still be large.
Why would that be a perverse incentive if the company is guilty?
"he took a salary of only $1 a year, which was less than minimum wage at the time" 😂
That thumbnail 💀
Would have been useful if you had presented the structure of Musk's pay package. Would've fit in nicely after the very interesting "history of CEO pay" part of the video.
Patrick is a cheeky passive aggrresive little b-word, he is not seeking balance.
This is the key point. The pay package was based on hitting incredible numbers. No one thought he would be able to, yet he did. Yet, the story seems to gloss over this fact. Including the judge. He 10x shareholder value. That's insane.
@@jesseholliday3480I enjoy him with a dry Martini.
Patrick is turning into an academic. His background should allow him to see the business case for this comp package - $60B to $600B is incredible.
@@iSport2ka8 above my pay grade. Just stop stealing what I've earned.
In response to people talking about LLCs in different states being like the "Switzerland of the US", neither Delaware nor Texas are anything close to offering the level of privacy that Switzerland was famous for. Nevada is better in this regard, but... at least for people who are living outside the US, arguably the best tax shelter product available in the world now is a South Dakota Trust with the addition of Wyoming LLCs as needed. South Dakota and Wyoming have conditions on these entities that keep the identity of the true owner of completely hidden, including not reporting information to foreign governments or even the IRS. If you want to get really crazy, there's some people out there that claim that setting up an LLC in the country of Nevis and operating it here in the US is even more powerful than even Wyoming, and you'd be shocked that this is even legal once you learn some of the benefits Nevis LLCs purportedly offer.
yeah ive read that recently. like 200 paygrades above my level lol. doesnt explain why companies still in ireland tho.. or why celebes still have tax havens offshore (panama papers etc.)
Interesting 😮
@@chillphil967Ireland is in the trading zone of the EU and has very low taxes in the EU. So for operations in the EU it's better to do it from Ireland than to do it from outside the EU.
Offshore holdings are to hide wealth, but you can't operate a business from there because then it would be obvious who's behind it
@@chillphil967 Ireland is pretty simple. Lowest corporate tax rate if your structure your business just right (12.5%) in the EU. Combined with English speaking population, decent place to live for high skill immigrants and a good education system churning out graduates able to work in biotech and tech industries. Every international company needs an EU base and Ireland is a very good one.
"level of privacy that Switzerland was famous for"
emphasis on WAS. And when it seized to be, that effectively meant it never was, as plenty of investors in Switzerland have been named in published papers.
Incorporating in Texas is just the peak of, "I'm taking my ball and going home," only Elon doesn't actually own the ball and has to ask a bunch of people if he's allowed to
Even chance that he can.
And Musk basically is Tesla.
Remove him and much of the faith in it would crash.
Musk's proposed compensation package is more than double the sum of all the profits that Tesla has ever made. In what universe does this make sense? Only if the principles of Hyperloopen Accounting Standards are applied can any sense be made of this ...
It's stock not cash
@@121dan121It's still a transfer of value.
He 10x'd the stock, and this is just options. Mary Barra is slowly destroying GM, but unlike Musk her pay isn't tied to performance. This guy with 9 shares 10x'd his money. Because of Musk. Telsa wouldn't have 10x'd without him, and you're delusional if you think otherwise.
In the universe in which profits are not relevant to share price. That's a universe in which things can go down as far as they went up.
@@121dan121 doesnt matter lol its shareholders money afterall
It’s incredible how we can watch your show and get such great detail and info on financial news stories and this channel is so much better than the newspaper or tv
Yeah I didn't see anyone else mention the difference in franchise tax/fee cost. Absolutely moronic
And yet in such a detail he fails to explain how insanely difficult it was to meet the goals in that incentive package. Tell me how biased Patrick is without telling me he is.
@@BartekCelaryyou know it better than the Delaware court? Heh.
Reporting is always an approximation of the event itself. A perfect map of the universe is a copy of the universe. In the same way, reporting can be said to be a map of the events that occured. We have a 34 minute essay on this topic by our friend Mr. Boyle. A news report is at best 5 minutes. In order to have detailed reporting on complicated issues you would need more time than you can afford to spend on it.
@@BartekCelary me thinks you're one of those people that has a very loose grasp on what the word bias means, so they run around screaming "bIAs!!" as some sort of panacea for criticism.
My guy, Elon has a 10% stake in the company and the board are a bunch of his closest friends. The "difficulty" had nothing to do with the legality of whether or not anyone is acting in their fiduciary duty. Elon already has every incentive in the world to prioritize Tesla's share price. From the perspective of a shareholder, the judge and anyone with a brain, he doesn't need an extra, unprecedented by orders of magnitude incentive package.
The pay plan was rescinded, not voided. There is an important legal difference. Recision allows the same pay plan to be put back in place, and also creates a bizarre legal ambiguity where you can’t go back in time, but the judgment acts like you can.
So we can reinstate it with a new vote as shareholders?
Tesla's board can, and likely will, issue a new comp package that "makes Elon whole", in addition to setting new targets with additional compensation or, as discussed on X, a second class of stock that provides Elon control without diluting shareholder value. And it's likely the shareholders would vote for such a plan.
But you can't reinstate the package because it's not 2018 anymore, and thus the package as written in 2018 makes no sense.@@Athl3ticM3dic
Based on accounting experts, Tesla board cannot retroactively redo the compensation plan because the tax consequences and total cash outlay would easily bankrupt Tesla!😂
And that also means that the lawyers are not entitled to $19B. Also, to what extent were these lawyers representing all shareholders? The benefits that these lawyers are entitled 1/3rd of, surely do not encompass the benefits to the company or shareholders, but to the benefit to the guy bringing the suit, and his 6 shares.
You are completely wrong here. This lawsuit is about the 2018 compensation package. Stock options were granted but never exercised. There has been no taxable event, and there wouldn't be if the pay plan was reinstated in its current state@@Agent77X
It is difficult for me to take Tesla investors seriously.
I follow some of these Tesla investors on TH-cam. They are convinced that Robotaxi will revolutionize transportation and bring in huge profits to Tesla. They also believe the Tesla energy will bring in huge amounts of profit. And they also take Mars colonization seriously. They put ordinary cult followers to shame.
Let’s say they’ve raised my opinion of Britney Spears fans.
They do seem to believe in magic, and generally behave like people in a cult.
Bunch of technologically and financially illiterate yahoos
Brilliant, detailed analysis. Even as a Tesla shareholder, it’s hard to see Musk’s attempt to incorporate in Texas as anything but a temper tantrum.
i see it as a smart business decision.
@@10010x0x0x01101XX0X1 Can you elaborate on the benefits of the decision?
@@10010x0x0x01101XX0X1 is that you Elon?
@@10010x0x0x01101XX0X1I see you as a waste of space.
Vote him out then 😂
Hi Patrick, Another of your very best programs. Thank you.
I love these deep dives into topics like this. I appreciate learning about the 'why' as opposed to what various people's opinions are.
Indeed. We could use more channels like this.
The world would probably be better off.
Including your ad, 5 commercials were part of this video. Hope YT gives you a good cut
You don’t have to hope that’s the business model he will get it
TH-cam premium ftw
Some folk have to work for a living.
Patrick dragging Elmo …always here for it
Anti-American as always
@@leogir1518 pretty sure they sold out long ago, pre2016
@@leogir1518Hope he sees this bro
Patrick has an obsessive hate of Elon. It's been going on for years. Patrick and Jake Broe are full of bile and lose all objectivity with their naked hate of the man. It's so sad.
Phillip.
@@philliptemple9841found the Muskrat.
Who tf has to pay the lawyers $18bn??
Talk about unfair compensation.
Shareholders
So they don’t want Elon to get billions but they want lawyers to?😂
The shareholders, unless this rediculous judgment is reversed on appeal.
Contingency-based compensation. If they lose they get nothing, if they win they get something like 1/3 of the judgment.
That history of executive pay etc was fascinating. More of that kind of thing please
No executives pay. Musk had his own investments in the company.
@Art-is-craft I've forgotten by now but as I understand it Musk got a lot of government grants.
can you do a video about BaltCap?
This was absolutely one of your best yet, very informative even outside of Tesla
Agreed. The details on the nature of the Delaware Court of Chancery, and the historical logic of stock options with historical examples of how it went wrong was a great education. I also appreciated the focus that Patrick did on the nature of the ruling, ie, not so much about the amount, but the process of rubber stamping and failed disclosure as well as some of the counterargument that Judge McCormick provided in relation to Musk's time spent at Tesla.
“Show me the incentive and I will show you the outcome.” - Charlie Munger
Early 80s real estate TH-cam was the best
that pay package was greater than all Tesla earnings in its history combined
And still much smaller than how much the stock value has grown since they first agreed on this compensation package.
Imagine mary barra agreeing to a compensation plan where she would get nothing if the stock stays stagnant. Obviosuly she would never accept such a thing
@@slopedarmor The company has begun to slide. The guy isn't worth any of this money. Period.
@@slopedarmor tesla stock have been under performing the end of 2021. He doesnt deserve that compensation since all of his major promises to shareholders have been underdelivered (FSD, robotaxi, energy, solar, CT, Semi, 4680 and the 25K car).
He should take his head out of his rear end and start concentrating on growing the business instead of acting like a narcissistic man child
@@greenearth9945
Musk was not rewarded on share value. He was given a larger share of the company if he was to increase sales, profits and so on. What he managed was amazing performance.
It's amazing how huge salaries and the status of running a big company aren't enough to motivate senior management. Seems to me senior management are in the wrong jobs and companies should find people who actually want to be in charge.
if i was the ceo and i made the value of the company go from 60bil to 600 bil, yes i do expect to be compensated at 10% of it. look at the lawyers they asking for 33% to win the case, is that fair compared to a ceo that raised the value of the company 10x? what did the lawyers actually do? ether ways, tesla without elon is nothing... elon is basically tesla, losing him for tesla would be similar to apple losing steve jobs the first time
@@songhan1586 I think you've fallen for the propaganda. Many people contribute to the growth of a company. I can point to things I have done that put large sums on the bottom line, but I have never been 'compensated' for it. If CEOs had to pay out equal sums when companies fail then high rewards might make some sense, but even during the banking crash CEOs walked away with pensions, salaries and bonuses intact. To add insult to injury, executives received bonuses simply for restoring the status quo or less.
The bottom line is that executives pay themselves as much as they can get away with and pay other employees as little as they can get away with. Sad but true.
@@songhan1586 Its impossible for YOU to do that. It takes the efforts of 1000s of people to 10x a companies value. And they and the stockholders should all benefit from it in a big way.
@@johnnynephrite6147 But shareholders did benefit massively, the company valuation 10x, so did the employees who got paid in equity as well. Tesla minted many employee millionaires even from normal line workers
@@songhan1586 The CEO isn't some kind of wizard. It's all employees that make it happen by working together.
Patrick is a great explainer, but I can't help thinking his night job entails biological experiments in his basement lab with the aim of world domination.
Thats Elons job
You can't use hindsight for valuation. That's ridiculous.
The most ridiculous part is that even Elmo's brother is in the board. Lmaoooo
His brother is on the board because he was the CEO of solar city, which was purchased for its distribution network and patents nearly a decade ago.
@@skyfall-1738a purchase that was already controversial given it merited its own mention in the video.
@@skyfall-1738 The same brother who said in court that he didn't know Elmo was going to buy solar city. Sure.
@@the0ne809 Nepotism is good for business
This is how the machine deals with people who tilt at it.
Excellent reportage and analysis. Ta.
The episode premiere hasn’t started yet, and I love it off the thumbnail alone 😂
I'm here for realistic Ketamine bloated Elon
@@CarShopping101 by this South African tub of lard we are saved, we are delivered!
I remember when this pay package was created years ago that he could juice the stock enough to trigger the options-and he did. The P/E ratio is still much higher than competitors, but he has advertising power, so I knew he would try and juice that stock price to his advantage.
It also had revenue and production targets aside from that stock target.
So even if the stock could be manipulated that far somehow, it wouldn’t have been enough on its own.
There are no competitors of significance to Tesla.
Right... juice the stock.. Musk worked his ass off on the model 3 at the time and the only thing he squeezed was the massive short sellers who were so sure Tesla was going bankrupt and constantly put out FUD and hate pieces on Elon to disparage Tesla and Elon.
Serious question: what does "juice the stock" mean?
@@chuckschillingvideos
Not Tesla problem any more than Microsoft’s.
Only people who win in lawsuits is the lawyers
Which should make ppl wonder if the dude with 7 stocks didn't do it to harm the company
If this is the new standard, it can be weaponized against all companies
@@user-xl5kd6il6c We should do it to Amazon eye for eye!!
Delaware does not look too good at present.
Imagine being payed more in a week than most people will see in a lifetime but that is not “motivational” enough to make you work hard.
just to be clear, by most you mean more than 99.9% of everyone who ever lived.
Elon is only paid minimum wage!
He gets stock options based on several requirements which guarantee that the stock owners always earn more than Musk.
Elon continues to start amazing companies but he keeps them private because it is just not worth the drama and lies to make the companies public.
This is our loss.
When did that happen?
@@thedalillama $55.8 billion divided by the 10 years the plan was supposed to run for works out to $107 million per week.
@@jameslake7775 $55.8 billion is a delusive amount. The compensation package was worth less than $1 billion when it was approved by shareholders.
What the compensation package later appreciated to is irrelevant. It's a bit like betting on a football game after it's over.
It's sad how easy it is to persuade the general public with irrelevant information. You appear to be a classic example of someone that believes they have an above-average IQ yet you don't have the capacity to process relevant information. You are in good company though, the judge has your same level of intellect.
God! That is a wonderful thumbnail! Appreciate the humour and the info!
God! Log off and touch some grass!
@@Matt67012 not a grass pervert. Won't be doing that.
@@Matt67012 Musk isn't your pal, he neither knows nor cares that you even exist, he's not going to give you a pony. You don't need to reflexively stand up for the serial liar. But of course you will.....
It seems like roughly speaking, his pay was ... Twitter. Which is amusing incentive. "Do a good job hyping the stock on Twitter and we'll buy it for you."
A guy who had nine shares ended up taking down Elon Musk by demanding accountability.
It's like a 1980s kid's movie 😂
Well, he's a thrash metal drummer, so there's that..
Took him down? Er ripped him off you mean?
Phillip.
Not all heroes wear capes, or in this case, sleeves.
@@philliptemple9841 Musk is a fool and has done nothing but ruin the reputation and value of Tesla. Techbro billionaires aren't real businessmen; they're just lotto winners. Musk put his unearned wealth into a rocket company and pretending to found an electric car company, so there are worse ways he could have blown it. Still, his inexperience and arrogance have finally come back to bite him.
This is so timely, as i listened to your podcast this morning about Twitter going broke. I need updates before i go home and whilst at job, so i subbed to the pod this morning. And here you are!
This explained way more than the title promised. Excellent.
Beware any company where leadership compensation is not linked to performance
But in this case, it IS linked to performance
@@user-xl5kd6il6c Do you mean performance of his self-marketing? He wrote the terms and no BoD approved it. Guys like you will argue all day long that sheisters like Elon deserve to own the planet, just because.
Lucid Motors..
@@doodlebug1820
Metric used as part of Musk share offers were sales, revenue,profits and production outputs.
I'm glad you mentioned "The Common Sense Skeptic".
*"And it's likely that the company will need new independent directors" ... Sure. Perhaps Elon will even allow X Æ A-Xii to conduct the due diligence for suitable candidates.* 😂
We need a Delaware deep dive
One of the historical reasons for incorporating in Delaware was it's hands off approach to business organization and management.
Depth and breadth
They've already got their bill. I say they lost about 1 billion dollars in taxes each year because of this single wrong judgement of this single female judge who was only following what her boss, Joe "Geezer" Biden told her. I am sure the government of Delaware is utlimately happy with her and him.
@@TheIndianaGeoffyeah, not anymore. Good luck while the business world tells Delaware to fck off
Would Elon spending more time on Tesla be a benefit or a drawback to Tesla value?
This was awesome! Thank you so much. Looking forward to the next one.
Great video! Straight forward explanation.
19:50 to 20:25 pure Patrick classic. Worth putting that on a loop. =)))
Elon Musk wants $50,000,000,000 so that he will get out of bed and work.
They should pay him that much to go away.
Very good and informative as usual. Amazing work. Thank you.
I very much enjoy listening to your commentary, thank you so much. I found you by accident and have spent the last 3 hours binging you, very, very interesting.
Was waiting for this! I wait for Patrick's videos the same way I used to wait for the LOTR movies. 😂
incorporate in texas wont solve anything. why do you think all the big tech are incorporated in delaware.
Elon doesn't know either. Due to the last few years of state politics in Texas, it's stereotyped as everything lefties hate.
Because in Delaware they pay / collaborate with Democrats.
Texas is the new pay / collaborate with Republicans.
@@stapleman007abusing the legal system to persecute someone based on their politics ? Naaa.😅😅😂 😅 😅
Its really not even a real state.. its a hub for hiding things like burisma...
@@stapleman007 that’s not how that works
Again, yet another, insightful video!
Again, please provide links to on-screen references shown/cited (esp. academic ones)!
Appreciate you and your videos
when delaware say the board isn't acting in shareholder interest, run!
But let's be honest how? Because they agreed to pay a wage based on growth? The 55B is around 9% of the value created, I don't understand the rhetoric of lack of disclosure of relationships, when the board properly disclosed the pay package, that is all that matters...
>Ohh no, we are being robbed
>Let's pay 19billion to our lawyers from the company that we say are robbing us
Ahh yes, that makes total sense
@@rui518
It was not a wage it was a share of the company. Musk was offering a great share if he could meet certain targets such as sales and profits and he smashed those targets. People are focused on the raw number when they should be focused on the size of the company he was gaining which was 10%. Musk could liquidate his share. And go do something else and people can just drive their normal petrol car.
Partick Boyle is the GOAT.
"Man can not live on stock options alone",
"Elon Musk's Giga-grant from Tesla"
Fascinating video. Thank you Patrick
Really enjoyed the corporate history section on 1965 to the late 90's
Drier than The Gobi.
Excellent Information! I think you clearly observe the American system which is not always the case for media in the US.
Don't forget that media are owned by rich families that want to "educate" you... Like how half of america think that thhethe biggest problem in the world is immigration while the other half think it is racism... It takes decaades of propaganda to brainwash people like that...
Nice to see Eisner roasted again and again. What a corporate dud.
Thank you for this illuminating video regarding CEO options/compensation and the advantages of incorporation in Delaware. Double thumbs up.
@14:00. The corporations law professor I had in 1992 told the class that it was California's and Wisconsin's government employees' retirement fund managers who were demanding corporations compensate executives by stock options. He said the motivation was comparing the new massive growth in stock prices of computer hardware and software companies with the long established corporations' lack of stock price movement. The managers wanted the old corporations to be like the new market newbie corporations with respect to stock price growth. They believed the carrot to get them to focus on stock price growth was to make their compensation dependent on stock price growth. This of course allowed all the scammers on Wall Street into the board room to consult on their tried and true methods for stock price manipulation (as well as Steve Job's famous backdating of stock option grants).
Tesla deal was based on production out put, sales, earnings and so on. It was not based on pure share value. Tesla earning per share increased by 400 times during that period.
This was the best explanation about how share holder value works, why it was established and what benefits it has for the company. Including what I was taught in university back in 1989!
Musks performance was based on production and revenue.
I’d love to see the justification for the $56bn bonus.
Company loses 70% of its value over 2 years. The biggest corporate loss of all time.
A company that has made $25bn profit for its entire history of operation.
Yep, sounds like a reasonable payment, $56bn of investor money. Nothing wrong with that.
If you have any doubt as to the swooningly sycophantic nature of the Tesla board, just listen to the recent earnings call. It is breathtaking
They let him get away mentioning Robotaxis, you know, the tech that would pay for itself years ago?
Musk took that company from nowhere to over 600 billion in value and you seem to think he shouldn't have influence? Musk has been the biggest reason that company is worth so much.
@@Stirlingsays Sure, Enron executives did that too.
@@Stirlingsays thats what makes it funny.. they need him to sell BS to keep the stock artificially inflated
@@StirlingsaysI don’t think you understand value or the history of Tesla… it definitely was worth something before he came along. Now it’s a sideshow, at best.
Thank you for being there, Patrick.
Your mixture of fact, analysis, irony and lore is perfect.
Truly appreciate the little history lesson. Good job
He most certainly should, because he can. It is evidence he will circumvent any law to defraud the shareholders of TSLA. Not that there will be anything left for these shareholders to sue.
9 shares lmao
A smart investor! Tesla stock worth nothing until you get a robot taxi... I would not hold my breath
@@pierregravel-primeau702
Tesla has revenues of nearly 100 billion and profits of about 18 billion and debts of 2 billion. What has any of that got to do with robots?
One important aspect was not mentioned in connection with Musk’s compensation package. The conditions/milestones for the options and how risky it was for him, because the milestones seemed unachievable and he would get nothing unless they achieve the milestones
No, they want to evaluate this in hindsight. It's like betting on a football game after it's played.
This lawsuit was originally filed in 2018, shortly after the pay package was approved. It was not filed after all 12 milestones were met.
One of the things argued in the trial was that in addition to the board's lack of independence, it also had internal projections showing the conditions/milestones were less risky what they presented to the shareholders.
@@jameslake7775 The judgement was 100% evaluated in hindsight. There is no reference to a grant date valuation. Thus, fairness was not appropriately considered.
The Feb 2018 proxy statement includes a copy of the comp agreement. As someone that values such things for a living, the comp arrangement was sufficiently disclosed to solicit approval. I could value the arrangement with publicly available information at the time. We don't rely on company estimates.
The judge has no business opining on the facts of the case. The facts she considered are simply irrelevant. The issues are well outside of her area of expertise.
It is obvious from the wording of the opinion, that it was a political decision, political statement. I hope the superior court has not been infiltrated yet.
It would have been hilarious if Elon argued that he is not a founder of Tesla and therefore can not be compared to Bezos, Gates and Zuck 😂
Finally a court in America makes a good decision.
It is not a good decision Musk took a small workshop company to a billion dollar manufacturing company. He increased earnings per share over that period hundreds of times. If Delaware does not rectify this decision it will ruin their stable business image. Right now there is a series of freak outs happening with companies based there.
BTW I remember when John Dvorak was singing the praises of Enron. In PC Magazine.
18:00 The way I heard it, requiring disclosure of top officer pay also contributed to the rocketing of that pay. Regulators thought it would have a “name and shame” effect, but what really happened was execs could see their peers’ pay and demanded more.
They don't explain the 7.5% tax. They lied about it by obscuring it in their promotions... As usual
Brilliant and educational, as always. ❤
Awesoe video. Thank you. I learned so much.
OMG I love that pic of Elon in your thumbnail. Right on target.
I was thinking the same thing 😂
I usually resist talk/podcasts. That changed until I came across your video. Subscribed.
This is very educational. Thank you!
Good morning from Texas.
we just love PatBo