Connect with us

Published

on

A Delaware judge has sided with Tesla shareholders who filed a lawsuit claiming that Elon Musk unjustly secured a $55 billion CEO compensation plan. The plan is now voided by the court.

It’s unclear what will come out of this unique situation where Musk could potentially have to give back billions of dollars worth of Tesla shares.

In 2018, Tesla shareholders voted for Elon Musk to get a historic new CEO compensation package that could be worth $55 billion for the executive if Tesla achieved remarkable growth in valuation and profits, which it did.

However, some shareholders argued that Musk unfairly secured this extremely generous compensation plan through misleading shareholders about the fact that the plan was being put together by an independent board.

They filed a complaint in court in Delaware. The case went to trial in 2022, but it took a long time for the judge to give her decision.

The case came back into the news lately as Musk discussed another potentially historical CEO compensation plan at Tesla as he seeks to get 25% voting control over the company. His stake in Tesla is currently down to about 13% (~18% if he ends up being able exercise some stock options left from his compensation plan) after he sold tens of billions worth of Tesla stocks to buy Twitter.

Musk said that Tesla was waiting on the judge’s decision before moving ahead with the new compensation plan

The decision finally came today. Delaware Chancery Court Chief Judge Kathaleen St. J. McCormick sided with the shareholders who filed the complaint:

This posttrial decision enters judgment for the plaintiff, finding that the compensation plan is subject to review under the entire fairness standard, the defendants bore the burden of proving that the compensation plan was fair, and they failed to meet their burden.

Musk briefly commented on the judgment, which he is most likely going to appeal, on X:

In short, the judge found that “Musk controlled Tesla” at the time the compensation package was put together:

The collection of features characterizing Musk’s relationship with Tesla and its directors gave him enormous influence over Tesla. In addition to his 21.9% equity stake, Musk was the paradigmatic “Superstar CEO,” who held some of the most influential corporate positions (CEO, Chair, and founder), enjoyed thick ties with the directors tasked with negotiating on behalf of Tesla, and dominated the process that led to board approval of his compensation plan. At least as to this transaction, Musk controlled Tesla.

An interesting caveat to the decision is that Musk’s lawyers had the option to shift the burden of proof that the compensation package was unfair to the plaintiff, but only if the package approved by “fully informed vote of the majority of the minority stockholders.”

Of course, Tesla shareholders voted for the plan, but the judge found that “the defendants were unable to prove that the stockholder vote was fully informed because the proxy statement inaccurately described key directors as independent and misleadingly omitted details about the process.”

Therefore, an important part of this case relied on the judge agreeing with the plaintiff that the board members behind the package were not “independent”.

Here’s how the judge describes how it wasn’t even clear who was negotiating on Musk’s behalf versus Tesla’s behalf:

The process leading to the approval of Musk’s compensation plan was deeply flawed. Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf. He had a 15-year relationship with the compensation committee chair, Ira Ehrenpreis. The other compensation committee member placed on the working group, Antonio Gracias, had business relationships with Musk dating back over 20 years, as well as the sort of personal relationship that had him vacationing with Musk’s family on a regular basis. The working group included management members who were beholden to Musk, such as General Counsel Todd Maron who was Musk’s former divorce attorney and whose admiration for Musk moved him to tears during his deposition. In fact, Maron was a primary gobetween Musk and the committee, and it is unclear on whose side Maron viewed himself. Yet many of the documents cited by the defendants as proof of a fair process were drafted by Maron.

After hearing from both sides, the judge found that there was “no meaningful negotiation over any of the terms of the plan.”

Musk’s lawyers tried to argue that the CEO made some “concessions” as part of negotiations, but the judge didn’t buy it.

In this litigation, the defendants touted as concessions certain features of the compensation plan—a five-year holding period, an M&A adjustment, and a 12- tranche structure that required Tesla to increase market capitalization by $100 billion more than Musk had initially proposed to maximize compensation under the plan. But the holding period was adopted in part to increase the discount on the publicly disclosed grant price, the M&A adjustment was industry standard, and the 12-tranche structure was reached in an effort to translate Musk’s fully-diluted-share proposal to the board’s preferred total-outstanding-shares metric. It is not accurate to refer to these terms as concessions.

One of the main arguments from Tesla shareholders who are against this lawsuit is that “it was good for everyone”. Yes, Elon gets 6% more of Tesla, but Tesla gets $600 billion more in valuation.

The judge had an answer to this argument:

At a high level, the “6% for $600 billion” argument has a lot of appeal. But that appeal quickly fades when one remembers that Musk owned 21.9% of Tesla when the board approved his compensation plan. This ownership stake gave him every incentive to push Tesla to levels of transformative growth—Musk stood to gain over $10 billion for every $50 billion in market capitalization increase. Musk had no intention of leaving Tesla, and he made that clear at the outset of the process and throughout this litigation. Moreover, the compensation plan was not conditioned on Musk devoting any set amount of time to Tesla because the board never proposed such a term. Swept up by the rhetoric of “all upside,” or perhaps starry eyed by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?

The story is still developing. I will update with more details as I continue going through the lengthy decision, which you can read below.

FTC: We use income earning auto affiliate links. More.

Continue Reading

Environment

In a first, the US will require grid planning for 20 years into the future

Published

on

By

In a first, the US will require grid planning for 20 years into the future

US grid operators haven’t been practicing long-term transmission planning, but for the first time, the Federal Energy Regulatory Commission (FERC) just made it mandatory.

FERC now requires proactive grid planning

FERC oversees interstate electricity transmission. The rule it released today, Order No. 1920, adopts specific requirements for transmission providers in the lower 47 states for long-term planning for regional transmission facilities. They also have to determine how to pay for them. (Texas has an an isolated grid, so it’s excluded.)

FERC gathered “tens of thousands of pages of comments, filed over the course of the past three years,” from stakeholders in the power industry, advocacy groups, and government bodies.

FERC chairman Willie Phillips said, “Our nation needs a new foundation to get badly needed new transmission planned, paid for, and built. With this new rule, that starts today.”

Operators are now required to conduct and periodically update long-term transmission planning over a 20-year time horizon to anticipate future needs. The order also provides for cost-effective expansion of transmission that’s being replaced, when needed – that’s known as “right-sizing” transmission facilities. FERC says Order No. 1920 “expressly provides for the states’ pivotal role throughout the process of planning, selecting, and determining how to pay for transmission lines.”

Phillips added:

Over the last dozen years, FERC has worked on five after-action reports on lessons learned from extreme weather events that caused outages that cost hundreds of lives and millions of dollars. We must get beyond these after-action reports and start planning to maintain a reliable grid that powers our entire way of life.

The rule also encourages grid innovation by requiring transmission providers to consider advanced transmission technologies that drive down ratepayer costs. Julia Selker, executive director of the WATT Coalition, said in a statement, “Grid enhancing technologies will be vital to achieving the seven economic and reliability benefits in the rule, especially production cost savings, reducing grid congestion, and improving performance in extreme weather.”

Melissa Alfano, senior director of energy markets and counsel for the Solar Energy Industries Association (SEIA), said in a statement:

Our energy system has vastly different needs than it did when the grid was built out over a century ago, and today FERC stepped up to account for many of these needs… As transmission providers comply with this rule, FERC will need to remain vigilant to ensure effective and meaningful implementation.

You can read the major points in FERC’s fact sheet here.

Electrek’s Take

Transmission providers actually having a long-term strategy in place for the US grid seems like such an obvious thing that one would assume it was already in place, but it wasn’t. Turns out grid operators weren’t planning for the long term.

As FERC’s chairman mentions above about getting beyond after-action reports, the grid operators now have to move from reactive to proactive. Better late than never with this major move to upgrade and expand the US grid.

This ruling isn’t going to be a magic bullet, as it will take years to roll out. Plus, there will be the inevitable head butting among states due to disparate rollout plans for renewables.

But ultimately, this is great news. The grid will have more capacity for renewables and become more resilient in extreme weather as these (finally) forward-looking plans are put into place.

Read more: The US just came up with a plan to upgrade 100k miles of transmission lines in 5 years


To limit power outages and make your home more resilient, consider going solar with a battery storage system. In order to find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. They have hundreds of pre-vetted solar installers competing for your business, ensuring you get high quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use and you won’t get sales calls until you select an installer and you share your phone number with them.

Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. – ad*

FTC: We use income earning auto affiliate links. More.

Continue Reading

Environment

Kia’s most powerful electric car, the new EV6 GT spotted ahead of its official debut [Video]

Published

on

By

Kia's most powerful electric car, the new EV6 GT spotted ahead of its official debut [Video]

Kia is expected to reveal the new EV6 GT later this year as its most powerful electric car yet. Ahead of its official debut, Kia’s new EV6 GT was spotted in a new 360-degree video, giving us our closest look yet.

The EV6 is Kia’s first dedicated EV based on Hyundai’s E-GMP platform. After launching the EV6 in August 2021, the electric crossover is due for a facelift three years later.

This will include a sporty new GT version. Kia revealed the EV6 GT in 2022 as its most powerful vehicle yet. With up to 576 hp, the high-performance EV can hit 0 to 60 mph in 3.4 seconds.

To prove its power, Kia put the EV6 GT up against a Ferrari Roma and Lamborghini Hurcan EVO, with the sporty EV out-accelerating both of them. The dual-motor EV6 GT, starting at $61,600, is also quicker than most supercars at more than half the cost.

We’ve seen the EV6 facelift out testing a few times ahead of its debut and caught a glimpse of the GT version earlier this year.

Kia revealed the first teaser images of the upgraded EV6 earlier this month with several new design features. One of the biggest is the new daytime running lights with its “Star Map Signature Lightning” to reflect Kia’s new design theme.

After unveiling three new EVs during its first annual EV day in October, it was clear the EV6 was the odd one out based on lighting alone.

Kia-affordable-EVs
Kia EV lineup from left to right: EV6, EV4, EV5, EV3, EV9 (Source: Kia)

Kia’s new EV6 GT show in new 360-degree video

Kia plans to release additional info on the new EV6 later this month, which will include a GT version.

Ahead of its official debut, a new 360-degree video from ShortsCar gives us our closest look yet at the new electric sports car.

Kia EV6 GT facelift 360-degree video (Source: ShortsCar)

You can see Kia improved the new electric cars’ silhouette and rear and front map designs. After completing its certification in South Korea, new info revealed the EV6 refresh will feature an 84 kWh battery pack, similar to the upgraded Hyundai IONIQ 5.

According to TheKoreanCarBlog, the new battery pack is good for up to 505 km (313 miles) range in Korea, a 24 km (15 miles) improvement over the current generation.

Kia's-new-EV6-GT
Kia EV6 GT (Source: Kia)

When it launches in the US, the EV6 could reach up to 370 miles EPA range, up from the current 310 miles on the long-range models. In Europe, around 600 km WLTP range is expected.

Kia also confirmed plans to launch its EV9 GT in January with “enormous power” and several other upgrades. Meanwhile, leaked images from China last month revealed the EV5 GT for the first time.

2024 Kia EV6 trim Starting Price Range (EPA)
Light RWD $42,600 232 mi
Light Long Range RWD $45,950 310 mi
Light Long Range AWD $49,850 282 mi
Wind RWD $48,700 310 mi
Wind AWD $52,600 282 mi
GT-Line RWD $52,900 310 mi
GT-Line AWD $57,600 252 mi
GT AWD $61,600 218 mi
2024 Kia EV6 prices and range by trim

To clear inventory, Kia is offering up to $9,000 in Customer Cash on the 2024 EV6. With the $7,500 EV lease bonus included, leases start as low as $229 per month (for 24 months). Kia is also offering other incentives like 0% APR for 60 months and owner loyalty bonuses.

Ready to drive off in a new EV6 at some of the lowest prices yet? We can help you get started. You can use our link to find deals on the 2024 Kia EV6 (and GT models) at a dealer near you.

FTC: We use income earning auto affiliate links. More.

Continue Reading

Environment

Tesla’s head of Cybertruck manufacturing is out

Published

on

By

Tesla's head of Cybertruck manufacturing is out

Tesla’s head of Cybertruck manufacturing has left the company. It’s unclear if he was involved in yet another round of layoffs or if he left on his own accord.

Over the last month, Tesla has been conducting several major waves of layoffs across its entire organization.

At least 10% of the workforce has been let go, but Electrek has heard that as much as 20% of the entire headcount could be gone by the time everything is said and done.

Tesla’s automotive business, including charging and manufacturing, as well as new product launches, took the biggest hit as Elon Musk appears to be transitioning Tesla away from its EV manufacturing roots to focus on autonomous driving products.

Now, the latest Tesla executive to leave is Renjie Zhu, director of manufacturing in charge of Cybertruck production. He announced on LinkedIn:

After triumphing the epic launch of Cybertruck program and ramping the volume production line to the steady 1K/W throughput orbit for the past 16 months in GFTX, also 7 weeks after the 5th Tesla-versary, my adventure with this great company has come to an end.

Zhu was in charge of manufacturing operations for Tesla’s highly succesful Model 3 and Model Y production lines at Gigafactory Shanghai.

In 2023, he came to Gigafactory Austin after Tom Zhu, then the head of Tesla’s operations in China, was placed in charge of roughly Tesla’s entire automotive operations with the goal of replicating Tesla’s success in Shanghai at its North American factories.

As we reported, Tom Zhu recently went back to China, leading the company’s effort there, and gave up his responsibilities in North America.

As for Renjie Zhu, it’s unclear if he left Tesla of his own accord or if he was let go as part of the layoffs.

We recently reported that some Tesla employees are leaving the company due to low morale at the company amid the layoffs.

The Tesla Cybertruck production ramp has been going about as expected, with Tesla achieving a production rate of 1,000 units in a week last month. The goal is 5,000 a week in the first half of next year.

FTC: We use income earning auto affiliate links. More.

Continue Reading

Trending