From the filing ..
"Defendants argue that rescission is a harsh consequence that would leave
Musk uncompensated. But Musk’s preexisting equity stake provided him tens of
billions of dollars for his efforts. And Defendants have not offered a viable alternative
short of leaving the Grant intact.
On this point, Valeant is instructive.932 There, the plaintiff claimed that the
directors of Valeant Pharmaceuticals International breached their fiduciary duties
by awarding themselves and other executives and employees large cash bonuses in connection with a “later-aborted corporate restructuring."
The performance based equity compensation package is a stock options plan that "... offers Musk the opportunity to secure 12 total tranches of options,
each representing 1% of Tesla’s total outstanding shares as of January 21, 2018. For
a tranche to vest, Tesla’s market capitalization must increase by $50 billion and Tesla
must achieve either an adjusted EBITDA target or a revenue target in four
consecutive fiscal quarters."
Large cash bonuses in one case vs the Musk case with stock options that, it's possible, could have ended up as never seeing an increase in value.
When you get down to it, the Board has a fiduciary responsibility to their shareholders, not to the CEO. Their job is the hiring/firing and setting of compensation for the CEO, in the interests of the shareholders.
It's not a big leap to understand that they could have paid Musk substantially less, and he would not have left the company in protest. Tesla is his primary identity. He is also a big shareholder, and if he believes he is key to the company's growth, then it would be in his financial interest to stay at the company lest he put his current stake at risk.
It's also hard to argue that Musk would "work less hard" if he were given less future compensation.
The board is showing complete malfeasance with this pay package. The shareholders would rightly vote them all out. Thing is, you can add Musk's shares and institutional shares and get a majority to keep the board in place because they have internal conflicts of interest. Which is sad because the mutual funds are - by not voting against the board, not being good stewards of THEIR shareholders, since the pay package is to the detriment of Tesla shareholders and that includes the people holding shares in their funds. But they have *personal* incentives to keep things as is.
It's pathetic. While there is presumably some Tesla exposure in any SPY or QQQ I hold, I do not hold any direct shares in Tesla because Tesla is bullshit.
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