Elon Musk’s compensation package case will haunt Tesla for years
I believe that Elon Musk’s compensation package will haunt Tesla for years as lawsuits are already piling up.
Everyone is pointing fingers at who they think is responsible for this situation. Here’s my take.
We are less than two weeks away from Tesla’s annual shareholders meeting during which we will know the results of the shareholder vote on Musk’s compensation package and incorporation move to Texas.
Many shareholders falsely believe that the issue will end there.
Shareholders will vote either for or against these two proposals. The truth is that not much will change after June 13th.
If shareholders vote yes again on the package, at best, it will be used as evidence that shareholders still support the deal for the appeal process in the case, which is still months away.
As for the incorporation move to Texas, many shareholders believe that this would allow Tesla to circumvent the judge’s decision in Delaware. However, Tesla and the judge recently had communications over that concern, and Tesla reassured the judge that they will continue to litigate the case in its proper jurisdiction: Delaware.
The next step is a hearing over the compensation that the lawyers for the shareholder who sued Musk and Tesla are asking for, which is a ridiculous $6 billion.
The compensation will likely be greatly reduced by the judge, but they will likely still get a nice payday, and the vultures are already circling to get more.
A new lawsuit was filed last week against Musk and Tesla directors over alleged insider trading by the CEO and breach of fiduciary duty by board members.
Regardless of the results of the votes later this month, Tesla will likely face other lawsuits regarding its corporate governance, which is being increasingly exposed by Tesla and Musk’s reaction to the judge’s decision over his compensation package.
For example, Musk has threatened not to work on AI products at Tesla if he doesn’t get 25% control over the company despite saying that Tesla is worthless without AI.
Electrek’s Take
I think I managed to distill my thoughts on Elon’s compensation package at Tesla into something a little clearer. I have been reporting on this for months, and I’m tired of it, but unfortunately, I think it will be a story for months, if not years, to come
Like many Tesla shareholders, I wasn’t happy about Elon selling shares from his previous CEO compensation package to buy Twitter.
But I understand that it is his right to do so.
He can do what he wants with his money, but he did lose credibility in my eyes because I remember him saying this:
He got a lot of people to believe in Tesla through commitments like this and then he broke it to buy Twitter of all things.
But Fred, that’s old.
OK, he also said this:
And then sold billions of dollars worth of Tesla shares in the following months.
All good. It’s not great for his credibility, but again, his money.
Now, what about this new 2018 compensation plan?
Do I really believe Elon is looking for 25% control of Tesla because he is scared of what Tesla’s AI will do if he has less control? No. I don’t buy that for a second.
Am I worried that he will dump his shares in a very poorly planned manner like he did the first time? Yes, I am.
But once again, it is his money, sort of, and he can do whatever he wants with it. I think he did incredible work at Tesla, especially between 2018 and 2021. He deserves it.
However, I can believe all that and still understand why Judge McCormick had to invalidate the package in her decision.
There’s no doubt that this litigation started because lawyers saw an opportunity to make money. They enlisted a willing Tesla shareholder with just 9 shares. But you have to ask yourself, why was there an opportunity?
And that’s because of Elon and Tesla’s board. They saw that Tesla’s board presented the package as being negotiated between independent board members and Elon. They looked into those directors and saw that they were anything but independent.
The only board member on the compensation committee who could have been described as independent would have been Robin Denholm. She became Tesla’s chairwoman after Musk had to give up the seat as part of a settlement with the SEC over his botched attempt to take Tesla private, but she was also getting a juicy compensation package worth tens of millions of dollars for a job that Elon himself said was worthless.
Suspicious.
The lawyers made a bet that, based on this situation, they would find a lot more problems with how this historic compensation package came about, and they were right.
They found problems like the board not negotiating the package beyond aligning the tranches with Tesla’s own projections, Elon’s point person on the package being his own divorce lawyer who was also Tesla’s general counsel at the time—blurring the lines as to who he was actually working for, and more.
These are all things that could have affected shareholders’ decisions on whether to vote for or against the package. The judge had to rescind it.
But instead of addressing the governance issues highlighted by the judge and that led to this situation in the first place, Tesla, evidently led by Elon, decided to push a narrative that there’s no issue and that the only reason we shareholders are in this situation is that a politically motivated judge decided to take away our right to decide for ourselves what Elon should get for compensation.
Massive claims like that need strong evidence and as far as I can tell, there’s no strong evidence that the judge did anything other than follow the law. The only thing I’ve seen posted by Elon and his fans is the fact that the judge used to work for a firm that represented President Biden in the past, but it was one of the biggest firms in Delaware, which is where Biden is from so it’s not surprising and doesn’t prove any wrongdoing.
This narrative about the situation being politically motivated is simply an attempt to ignore and divert attention from Tesla’s governance issues.
At this point, I think Tesla and its shareholders would be way better off addressing these issues, going back to the drawing table on a compensation deal that is negotiated in good faith, and then going back to shareholders for a vote.
I even think that the deal could be the same amount minus all the costs that Tesla incurred related to this issue, like the legal costs and all the advertising that the company is spending on this vote.
The alternative is, more likely than not, years of costly litigation and this dark cloud over Tesla.
But a big part of the problem is that it doesn’t seem that Elon is interested in establishing proper governance at Tesla because he is not well suited to be an officer in a public company. That’s partly why he tried to take Tesla private – poorly, I might add.
Based on the rumors he is choosing not to deny, he seems to be happy leaving this choice to shareholders: proper corporate governance at Tesla or Elon. You can’t have both.
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![Tesla can't buy land in Australia because CEO Elon Musk is so '[redacted]'](https://i0.wp.com/electrek.co/wp-content/uploads/sites/3/2024/05/Elon-Musk-wrecking-ball.jpg?resize=1200,628&quality=82&strip=all&ssl=1)
Tesla is trying to use a piece of property in Australia, near Adelaide, in order to build a battery factory and Tesla showroom. But it’s facing steep opposition from locals, most of whom cite dissatisfaction with Tesla CEO Elon Musk as their reason to oppose the project.
The plans center on Marion, a small city of population 4,101, a suburb of Adelaide, the capital of South Australia.
Last month, a developer submitted plans to use a piece of land referred to as Chestnut Court Reserve, which has been inaccessible to the public since 2016 due to contamination concerns. Plans to develop the location would involve a requirement to clean up the contamination on the site.
They would also involve the cutting of several trees on the site, some of which have been deemed as “dead or ill health,” with a plan to plant trees at another site to make up for any removals.
The developer said it would use this land to build a new fit-for-purpose factory facility that would be used by Tesla both as a showroom and service center for Tesla vehicles, and also a facility that could be used for “repurposing of Tesla batteries.”
The plan doesn’t go too deep into the specifics of how said repurposing would happen, but it could involve using Tesla vehicle batteries in Powerwalls, or in Tesla’s Powerpack grid storage projects, which are quite popular in South Australia, where they have helped to solve some of the region’s significant power stability problems.
The developer makes the case that Tesla already has a presence in the area in neighboring Tonsley, that Tesla’s mission (and the specific mission of a battery recycling center) supports the environmental goals of the community, and that the facility would create around 100 full-time jobs in the local community, including highly skilled jobs like battery researchers.
All in all, the developer thinks it would inject $56 million into the local community, quite a nice chunk of change for the small town.
And the city council also supports the plan, thinking that the job and economic benefits are worth it, particularly given that the land is not being used for anything else.
The plans were submitted, the residents were consulted, and now that all the chips are on the table… the residents aren’t having it.
Residents respond with a lot of language we shouldn’t say here
The local community gave significant pushback to this idea, with some ~95% of residents disapproving the plan. The city received 948 comments on the plan, which sounds like quite a lot for a city of 4,101 people. However, half of those comments came from outside the city’s area.
But among those comments from the immediate area of the development, only 11 comments favored the plans, with 121 opposing them (that’s 92% opposition).
Among the comments (quoted by The Guardian) come these gems, which wonderfully showcase the stereotypical Australian predilection for colorful language:
- “Because Elon Musk is a [redacted] human being and a [redacted]!”
- “Elon Musk and Tesla are a [redacted] on humanity”
- “Elon Musk is a full blown [redacted]”
- “Destroying trees to build a factory for a company owned by a [redacted] would be a vile choice”
- “We should not support and put money in the pockets of a [redacted] who openly [redacted] salutes, is [redacted] human”
We’ll let you try to fill in some of those words, though we’re pretty sure what some of them are (and, honestly, while I somewhat understand the point of redacting profanity in public records, I’d say it is a little absurd to redact “nazi”).
The plans haven’t received their final vote yet, and the council still seems like it wants to convince the local community to go forward with them. But some residents suggest that the site could be better used by other companies, and that alternate uses could help to preserve that land and also avoid potential image concerns for the area as protests against Tesla continue globally.
Some other comments, perhaps wrongly, called the possible building “a noisy, ugly, planet-destroying temple to billionaires.”
While it’s disappointing to see a proposed recycling facility referred to thusly (although Tesla does have a questionable history when it comes to following local environmental rules), it’s just another sign of how Tesla CEO Elon Musk is drastically affecting the brand, and holding it back from its stated mission to advance sustainable transport.
Response shows once again that Musk is harming Tesla
The responses show just how damaging Tesla CEO Elon Musk has been to the company with his recent public advocacy, which has included performing back-to-back unambiguous Nazi salutes in front of a large crowd, agreeing with a defense of Hitler’s actions in the Holocaust, and many other white supremacist statements.
His advocacy hasn’t been limited just to the United States, where he is currently working to balloon the US deficit and is the largest funder of the republican party who are trying to tax EVs and send US jobs to China. He’s also meddled in other countries’ politics, including support for German neo-Nazis.
These actions have driven protests against the company, embarrassed owners and pushed many customers away, and even resulted in a hack that doxxed many Tesla owners.
The backlash, like Musk’s advocacy, has been global. Tesla sales are dropping in most regions, even as EV sales rise as a whole. Specifically in Australia, Tesla sales saw a big drop year-over-year. And this has applied to corporate customers too, with Tesla losing corporate sales as multiple companies have cited their distaste with the CEO.
While Musk has tried to brush these falling sales numbers off, it’s clear that he personally is doing incredible brand damage to the company.
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For years, Tesla has been the go-to EV recommendation for “normals” looking for a painless, low-effort experience from their first electric cars, but Elon Musk’s political antics are causing people to shop elsewhere. On today’s episode of Quick Charge, we’ll discuss some options … and how you might be able to pay for them!
Speaking of Tesla alternatives, the Ford F-150 Lightning is the electric truck sales king once again, while the E-Transit van is now selling for the same (or less) than the gas version and Ford Pro launches a new incentive consulting service to help you pay for them.
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The world’s leading electric vehicle (EV) maker is rapidly expanding overseas. After taking control of vehicle sales in Germany last year, BYD is about to do the same in another key overseas EV market.
BYD to take control of EV distribution in Australia
Last August, BYD reached an agreement with Heden Mobility Group to acquire Heden Electric, which was responsible for importing its vehicles and spare parts for sale in Germany.
The move gives BYD more control over pricing and other areas of distribution as it expands the brand overseas. By taking over control, the company can sell its vehicles directly to buyers. And, it can also set prices.
According to EVDirect, BYD’s official distributor in Australia, the company is preparing for a similar move in the region. Luke Todd, founder and chairman of EVDirect, said the takeover would help unlock BYD’s potential in Australia.
Todd said the first phase was proving that the “BYD brand would thrive here,” and the next phase will make EV ownership “easier and more accessible than ever.”
Since launching its first vehicle, the Atto 3 SUV, in 2022, BYD has become one of the fastest-growing car brands in Australia.
BYD now offers a complete lineup of six vehicles, ranging from the low-cost Dolphin and Atto 3 to mid-size SUVs (Sealion 6 and 7), electric sedans (Seal), and even a pickup (Shark 6).
Earlier this year, the company introduced a new entry-level “Essentials” trim, slashing prices across its entire lineup.
According to TheDriven, BYD has three of the top 10 best-selling electric vehicles (EVs) in Australia as of April. The Sealion 7, launched in just February, placed fifth with 1,473 units sold, trailing the Tesla Model Y (3,394), Model 3 (2,266), MG4 (1,698), and Kia EV5 (1,509).
BYD’s Atto 3 took sixth (956) while the Seal (637) and Dolphin (431) placed ninth and 14th through the first four months of 2025, respectively.
Taking control of distribution is expected to help improve service for current BYD drivers and will likely boost EV adoption in Australia.
Electrek’s Take
BYD’s sales are surging in China and overseas. In April, BYD sold more electric vehicles (EVs) in Europe than Tesla for the first time. Now, it’s launching its best-selling and most affordable electric car, the Dolphin Surf (also known as the Seagull EV in China).
S&P Global Mobility is calling for BYD to more than double its sales in Europe this year to around 186,000 units.
And clearly it’s not just Europe. BYD is quickly establishing its presence in major overseas markets, including Mexico, Brazil, Thailand, Australia, New Zealand, and many others.
With local production coming online and new, custom-tailored vehicles launching, BYD is laying the groundwork to continue gaining global market share over the next few years as the industry shifts toward electric vehicles. And that’s not even scratching the surface, with BYD’s new battery and ultra-fast EV charging technology set to change the game.
Source: EVDirect, TheDriven
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