Elon Musk acted this Wednesday as a luxury guide to the Tesla factory in Austin (Texas) for the winners of a raffle among shareholders. that lottery It has been one of the ways in which the magnate has tried to encourage participation in the decisive shareholders’ meeting this Thursday. The meeting’s agenda includes two highlights in which Musk gauges his support for the electric car maker’s equity. In one, he proposes to ratify a multimillion-dollar bonus for the executive, valued at the time at 56 billion dollars (about 52 billion euros), which a Delaware judge annulled. In the other, the vote is precisely on the transfer of Tesla’s legal domicile from Delaware to Texas. According to the tycoon has tweeted, Both are guaranteed approval by a wide margin, based on the early vote.
Musk seeks a kind of retroactive endorsement of an unprecedented remuneration that was already approved by the board, but with a flawed process, according to the ruling of Judge Kathaleen McCormick. Even if the company’s CEO definitively wins the vote, as has been advanced, it is not clear that this will allow him to receive the company’s shares, but it would give him strength when appealing the ruling that annulled the remuneration.
Numerous institutional investors and shareholder advisory firms have spoken out against a payment that is unprecedented in American corporate history and would substantially dilute the value of their own shares. Musk has subjected his shareholders to a kind of blackmail, implying that his commitment to the company he runs would be reduced if they do not support him.
Some investors don’t buy that argument. They claim that Musk’s 13% stake in Tesla, valued at about $75 billion, and his history with the company make it unlikely that he will leave and that if he neglects his management duties he may face new lawsuits from shareholders. However, the majority have decided to support him.
In 2018, Tesla estimated the value of Musk’s compensation package at $2.28 billion, already a record, but the actual amount increased as the stock appreciated. The bonus consists of options to acquire 303,960,630 shares, valued at the current market price ($176 per share) at $53.6 billion. As the exercise price of these options is $23.34 per share, the implicit benefit would now be valued at around $46.4 billion (€42.8 billion).
All the income, gross operating profit and market capitalization milestones to which the remuneration was subject (and which were very ambitious) have already been met, so what the meeting is about is whether or not to recognize that amount. “We turn to you now to help us solve this problem, which is a matter of fundamental fairness and respect for our CEO. They have the opportunity to reset their vote and make it count. “We ask you to make your voice heard—once again—by voting to approve the ratification of Elon’s 2018 compensation plan,” wrote Robyn Denholm, chairwoman of the company’s board of directors, in a letter to shareholders that accompanied the announcement. meeting call in which he appealed to “corporate democracy.”
The judge he wrote in a 201-page ruling that “the process that led to the approval of Musk’s compensation plan was deeply flawed. “Musk had extensive ties to the people in charge of negotiating on behalf of Tesla.” According to McCormick, Musk had a 15-year relationship with the president of the compensation committee, Ira Ehrenpreism, and business and personal relationships, to the point of sharing family vacations, with the other member of the compensation committee who was part of the working group, Antonio Thank you. That same task force included Todd Maron, who was Musk’s attorney in his divorce and whose admiration for Musk brought her to tears during his testimony at trial.
Tesla has included McCormick’s sentence in board documentation, as recorded in the call sent to the United States Securities and Exchange Commission (the SEC). His thesis is that the approval shows that shareholders support the package with full knowledge of the judge’s criticisms. But approval does not guarantee that Musk will receive his bonus.
If the company fails to convince McCormick to change his ruling, which is not yet effective, Tesla plans to appeal all the way to the Delaware Supreme Court, a process that would take months.
For McCormick’s final ruling, it is still necessary to decide on the payment that corresponds to the plaintiffs. The lawyers claim around 10% of the supposed savings they have generated for the company, which would mean a fee of around $5 billion for the legal team headed by Richard Tornetta, the small shareholder whose lawsuit caused the payment to be cancelled. Tesla flatly rejects this claim and believes that the appropriate bill would be a maximum of 13.6 million.
The other star proposal is the transfer of the company’s legal domicile to Texas, where its operational headquarters is, from Delaware, where it is now incorporated and registered. It required not only the majority of the board, but the majority of all capital, but it has also been achieved, according to Musk.
The vast majority of large American companies choose Delaware for its flexible and business-friendly laws, tax advantages, and its entire pro-business ecosystem, including regulation and dispute resolution mechanisms.
Musk, however, came away scalded by Delaware’s seriousness in corporate matters. When he signed the agreement to buy Twitter and then wanted to back out with excuses that did not hold up, the company’s lawsuit against him to enforce what was signed had all the signs of succeeding. Finally, Musk gave up and went ahead with the operation. After purchasing the company, he moved the corporate headquarters to Nevada. It was also in Delaware where the judge annulled his stratospheric compensation. After that failed, Musk set up a poll on his social network in which his followers voted in favor of the transfer.
Sexual harassment allegations
Tesla shareholders meeting takes place just after The Wall Street Journal has published an extensive investigation into the way in which Musk has pursued and sexually harassed women who worked at SpaceX, of which he is also CEO, including a former intern. The New York newspaper cited sworn statements signed by one of the women and other interviews with people close to her. Former company executives describe a culture of sexism and harassment, something denied by Gwynne Shotwell, president of SpaceX, who assures that the company thoroughly investigates all complaints of harassment and takes appropriate measures in response.
In 2013, one of the women who worked under Musk’s direct orders left the company and reported that the CEO had asked her to have his children, according to the information, which it cites adds that their relationship deteriorated after she rejected his offer.
In another case in 2014, a woman who had a sexual relationship with Musk while she was directly dependent on him faced recriminations when the relationship ended badly. She left the company and signed an agreement that prohibited him from discussing her work for Musk, according to The Wall Street Journal.
Allegations of sexual harassment and retaliation at SpaceX have been raised before, including civil rights violations in California earlier this year. A news item published in 2022 by Business Insider It claimed that SpaceX paid $250,000 to a stewardess on the company’s corporate plane in exchange for her burying the complaint of harassment she suffered from the magnate in 2016. The information recounted what happened in some detail. According to Insider, The flight attendant accused Musk of showing her his erect penis, rubbing her leg without consent and offering to give her a horse in exchange for an erotic massage, according to interviews and documents obtained by said publication.
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