Judge orders Tesla, Inc. (NASDAQ:TSLA) board to face trial, with billions of dollars at stake for Elon Musk
Elon Musk stood to take home billions of dollars under a compensation package approved by Tesla Inc.’s board — but that could all change in a trial ordered by a Delaware judge.
The judge, Vice Chancellor Joseph Slights of the Delaware Court of Chancery, ruled Friday that Tesla’s board must defend CEO Elon Musk’s multibillion-dollar compensation in a shareholder lawsuit, denying the board’s motion to dismiss, according to a CNBC report.
Slights wrote that he would have dismissed the lawsuit were it not for the fact that Palo Alto-based Tesla had conceded that its compensation committee was not independent of Musk.
“Had the Board ensured from the outset of “substantive economic negotiations” that both of Tesla’s qualified decision makers—an independent, fully functioning Compensation Committee and the minority stockholders—were able to engage in an informed review of the Award, followed by meaningful (i.e., otherwise uncoerced) approval, the Court’s reflexive suspicion of Musk’s coercive influence over the outcome would be abated. … Plaintiff has well pled, however, that the board level review was not divorced from Musk’s influence,” he wrote.
While Musk only holds about 20 percent of Tesla’s stock, Slights found that Musk’s “sway over Tesla” made him — in effect — a legal controller.
“As a controller, the board is subject to a higher standard of legal oversight for decisions it makes regarding its relationship with Musk.”
The lawsuit by shareholder Richard Tornetta alleges that the board breached its fiduciary duty in approving the package, that the package amounts to unjust enrichment for Musk, and is waste of company resources. Slights dismissed the waste claim, writing that Tornetta has not adequately pled his case in that claim: “The well-pled facts fail to support a reasonable inference that no person of “ordinary sound business judgment” would have granted the Award, a fact made even more clear in the light of the informed stockholder vote that approved it.
Approved in March 2018 with 73 percent votes in favor — excluding Musk and his brother Kimbal — the compensation package offers neither salary, cash bonus nor equity that vests over time, instead setting rewards based on stock options that vest if Tesla meets certain milestones, ultimately hitting a $650 billion market capitalization by 2028.
At that time, investment advisory firms Institutional Shareholder Services and Glass Lewis were against the pay package, saying it dilutes existing investors and does little to curtail Musk’s space, tunneling, mind-reading and comedic ambitions. Investor T. Rowe Price, however, supported the package, saying in a statement: “From our perspective, the board’s compensation committee addressed the challenge in the right way, thinking creatively about ways to structure the milestones and conducting outreach to gather investors’ perspectives and recommendations. We believe the final plan is well aligned with shareholders’ long-term interests.”
The package was worth more than $2 billion when it was approved, and the first tranche unlocks when the company hits a $100 billion market cap, rising an additional $50 billion for each of the next 11 tranches. So far, Tesla is sitting at a market cap of $42.94 billion.
Tesla’s stock opened Monday morning at $240 a share, having closed at $240.62 a share on Friday. It has been on a downswing for the year, having reached a peak of $376.79 on Dec. 13, 2018, and hit a low of $178.97 on June 3, 2019.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 236.94.
The projected upper bound is: 262.90.
The projected lower bound is: 219.40.
The projected closing price is: 241.15.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 41.8550. This is not an overbought or oversold reading. The last signal was a sell 6 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 56.16. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 41 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 29. This is not a topping or bottoming area. The last signal was a sell 5 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 15 period(s) ago.
Rex Takasugi – TD Profile
TESLA INC closed up 0.610 at 241.230. Volume was 50% below average (consolidating) and Bollinger Bands were 7% narrower than normal.
Open High Low Close Volume___
240.000 245.179 239.220 241.230 4,391,630
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 243.32 234.99 263.74
Volatility: 35 58 61
Volume: 5,750,499 6,836,176 8,972,597
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
TESLA INC is currently 8.5% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of TSLA.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on TSLA.O and have had this outlook for the last 9 periods.