Tesla pay fight tests power of Elon Musk's mystique
What specific goals did Tesla set that justified the initial approval of Elon Musk's compensation package in 2018?
In 2018, Tesla shareholders approved a compensation package for Elon Musk that was structured around 12 tranches of stock options. The package was designed to award Musk millions of stock options on achieving several ambitious stock price, revenue, and profitability goals. The specific goals included increasing levels of top-line revenue and bottom-line earnings before interest, taxes, and depreciation. Additionally, the package required Tesla to hit revenue and profitability milestones, as well as achieve a market capitalization of $100 billion, which would increase by $50 billion for each additional tranche. These goals were considered extremely stretching targets that would make a significant amount of money for shareholders if reached.
How did the Delaware court justify its decision to void Elon Musk's compensation deal earlier this year?
The Delaware court voided Elon Musk's compensation deal earlier this year on the grounds that it was "unfair" and the process for determining the package was "deeply flawed". The court found that the sum was excessive and that the Tesla board, which was dominated by Elon Musk, did not independently and objectively determine the compensation. The judge ruled that the board failed to prove that the pay package was "entirely fair" to Tesla shareholders.
How has Tesla's stock performance and industry leadership position been affected in recent times as per the article?
Tesla's stock performance and industry leadership position have faced challenges in recent times. The company's stock has become one of the worst performers on the S&P 500, and it temporarily lost its top position in the electric vehicle (EV) market to Chinese competitor BYD. Furthermore, Tesla experienced a decrease in car deliveries for the first time since 2020. These setbacks have raised questions about the company's future and the impact of Elon Musk's controversial actions and statements on Tesla's vehicle demand. Despite these challenges, Tesla's potential success in India and its positioning as both a collaborator and competitor in the automotive space offer reasons for cautious optimism5.