A legal expert and former New York City-based portfolio manager has jumped into the debate surrounding Tesla, Inc.’s (NASDAQ:TSLA) shareholder vote to reinstate CEO Elon Musk‘s 2018 compensation plan, which was voided by a Delaware court, citing the lack of sufficient information provided to shareholders.
What Happened: Lawrence Fossi, in a Substack post, delved into why the Tesla board probably chose to seek a shareholder vote for ratifying the old pay package rather than “starting from scratch with a new grant.”
“I think there are two clear answers, one for Tesla and one for Musk,” he wrote.
If the board were to award a new compensation plan for Musk, matching the one from 2018, Tesla would show “massive losses for many years to come,” according to Fossi.
“And for Musk, such a package would create targets that would be all but impossible to achieve.”
Fossi detailed how the 2018 award was created, noting that Tesla had managed to whittle down the grant's $55.8 billion potential value to merely $2.6 billion as a compensation expense after various discounts.
The Hurdles: Fossi wrote that a new stock-based compensation expense for Musk is no longer possible because Tesla's current share price “is more than seven times ...