Well-established law prohibits a fiduciary from appropriating opportunities that belong to the corporation. Yet Elon Musk is doing just that, while throwing in some nasty extortionate threats.
I think the vibration I just felt was Justice Cardozo spinning in his grave as Musk beclowns corporate governance.
"Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior." Meinhard v. Salmon, 164 N.E. 545, 546 (N.Y. 1928)
The one salve is Tesla's man-in-spandex, er, Robot, and whatever 'corner case' regurgitating dangerous software they call "AI" almost certainly has no value and would will destroy value. The robot stock-pump smells a lot like 1980s GM desperation for the 'factory of the future' that would 'leapfrog Japan.'
His antics, however, normalize the deviance, the most worrying part in my view.
Yup. Nicely done. These two tweets pretty much ensure that if Tesla's stock continues to decline, but XAI does well, shareholder lawsuits for violation of fiduciary responsibility against Musk & Co directors are well grounded. Not only that, but presenting this matter in this way strongly implies that he believes that he is a controller.
It's such a huge fraud. This is not the Tesla Board. This is pure, unadulterated Elon. I wonder what lawyer came up with the gambit of a Section 204 ratification. Because the proxy statement has the feel of something 100% designed and written by lawyers, based on Elon's instructions that he must get back those options.
The reply briefs from the Tornetta Plaintiff regarding its emergency motions are due tomorrow. As well as a brief regarding the Professor Elson kerfuffle. Should make for interesting reading, and writing!
Given SpaceX is missing milestones left, right and centre - but will be more than likely bailed out by the USA tax payer - Tesla was and is the only 'business' which appears to be operational, albeit CyberTruck was in many ways an expensive dead end. Of course, investment in manufacturing and product liability remain opaque, as they have been since 2012 - especially the CCP contractual tie-in.
It does look like Mr Musk is going to jump ship, just as Tesla has to compete head to head with others - especially his friends from China - for market share. I have no doubt the first new automotive volume manufacturer to be created in the USA for many decades will live on, although who would buy it is less than clear.
I believe Musk will stay with Tesla. It's his biggest claim to fame. It is his easiest way of raising money. It's profitable, and has lots of cash, which comes in handy when it becomes necessary to slosh funds around from one Musk company to the next.
Most of all, it's his cult, and cult leaders are loathe to forego the adulation.
There's the nub of the debate. Yes, from the point of Mr E Musk the ATM that's called Tesla is mightily useful and funds all sorts of things. The downside to self-belief is self delusion, and the commercial incompetence of Cybertruck as well as the Class 8 truck shows a worrying trend for Tesla shareholders - let alone the random content variations for the ADAS (so called 'AutoPilot', with Radar added, then deleted, then added again...) which causes many questions to be raised. These liabilities are building, so there will be a crisis. The Robotaxi (terrible name) is simply the next step off the edge of a cliff.
In manufacturing terms many OEMs have caught up with Tesla, and most know how to do multiple model generations - something Tesla appears to be struggling with (the huge amount of money wasted on Model S II and Model X II in return for very limited sales).
You are probably right. Musk will only go on his terms, and that might not be for some time.
If you want Tesla to be a capable EV manufacturer, with a powerful brand and a decent shot at being profitable most years, then Musk must go. Because as you note, his approach is running the company into the ground. However, you also will have to be ready to take a big share price hit as its P/E multiples come into line with the rest of the industry.
Because the reality is that Tesla's massively inflated share price (and, hence, market cap) depend on Musk's presence. For now, that is. As we move closer to 2025, the share price is likely to continue grinding down. The Musk magic is already wearing off. And there are, of course, big risks lurking with fraud litigation over FSD, personal injury lawsuits, the DOJ, the NHTSA, the SEC, etc. Not to mention what I regard as the certitude of continuing litigation over Musk's compensation.
The non-cultists who will vote to ratify the compensation package fear, more than anything, a rapid drop in the stock price. The smart ones will tiptoe out, probably before the June 13 vote and certainly before the Q2 results are released and the horror show of August 8 arrives. The index funds, alas, are stuck. They (and the millions of small investors with retirement money parked in index funds) will suffer the most while deserving it the least.
Thank you for this. What Tesla is doing makes little sense as a car company, but I see shareholders might be petrified about how it lands back to earth with minimal damage. I'm not an investor - so, I am merely an observer.
I think the vibration I just felt was Justice Cardozo spinning in his grave as Musk beclowns corporate governance.
"Many forms of conduct permissible in a workaday world for those acting at arm’s length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior." Meinhard v. Salmon, 164 N.E. 545, 546 (N.Y. 1928)
So true. Though the great Cardozo would, I think, be quite proud of Chancellor Kathaleen St. Jude McCormick.
Absolutely.
The one salve is Tesla's man-in-spandex, er, Robot, and whatever 'corner case' regurgitating dangerous software they call "AI" almost certainly has no value and would will destroy value. The robot stock-pump smells a lot like 1980s GM desperation for the 'factory of the future' that would 'leapfrog Japan.'
His antics, however, normalize the deviance, the most worrying part in my view.
Yup. Nicely done. These two tweets pretty much ensure that if Tesla's stock continues to decline, but XAI does well, shareholder lawsuits for violation of fiduciary responsibility against Musk & Co directors are well grounded. Not only that, but presenting this matter in this way strongly implies that he believes that he is a controller.
\
Musk's May 18 tweet is now enshrined in EDGAR for future generations to study.
https://www.sec.gov/Archives/edgar/data/1318605/000110465924064005/tm2413800d9_defa14a.htm
We must have it backwards, Tesla seemingly owes EM a fiduciary duty to place his interests ahead of its own.
It feels that way, doesn't it?
Thanks for the read. Solar City was brazen. This is...reckless.
It's such a huge fraud. This is not the Tesla Board. This is pure, unadulterated Elon. I wonder what lawyer came up with the gambit of a Section 204 ratification. Because the proxy statement has the feel of something 100% designed and written by lawyers, based on Elon's instructions that he must get back those options.
Lawrence, I hope you continue to write a weekly critique of Musk the Gangster Capitalist. Thank-you for the work you put in.
The reply briefs from the Tornetta Plaintiff regarding its emergency motions are due tomorrow. As well as a brief regarding the Professor Elson kerfuffle. Should make for interesting reading, and writing!
Given SpaceX is missing milestones left, right and centre - but will be more than likely bailed out by the USA tax payer - Tesla was and is the only 'business' which appears to be operational, albeit CyberTruck was in many ways an expensive dead end. Of course, investment in manufacturing and product liability remain opaque, as they have been since 2012 - especially the CCP contractual tie-in.
It does look like Mr Musk is going to jump ship, just as Tesla has to compete head to head with others - especially his friends from China - for market share. I have no doubt the first new automotive volume manufacturer to be created in the USA for many decades will live on, although who would buy it is less than clear.
I believe Musk will stay with Tesla. It's his biggest claim to fame. It is his easiest way of raising money. It's profitable, and has lots of cash, which comes in handy when it becomes necessary to slosh funds around from one Musk company to the next.
Most of all, it's his cult, and cult leaders are loathe to forego the adulation.
There's the nub of the debate. Yes, from the point of Mr E Musk the ATM that's called Tesla is mightily useful and funds all sorts of things. The downside to self-belief is self delusion, and the commercial incompetence of Cybertruck as well as the Class 8 truck shows a worrying trend for Tesla shareholders - let alone the random content variations for the ADAS (so called 'AutoPilot', with Radar added, then deleted, then added again...) which causes many questions to be raised. These liabilities are building, so there will be a crisis. The Robotaxi (terrible name) is simply the next step off the edge of a cliff.
In manufacturing terms many OEMs have caught up with Tesla, and most know how to do multiple model generations - something Tesla appears to be struggling with (the huge amount of money wasted on Model S II and Model X II in return for very limited sales).
You are probably right. Musk will only go on his terms, and that might not be for some time.
If you want Tesla to be a capable EV manufacturer, with a powerful brand and a decent shot at being profitable most years, then Musk must go. Because as you note, his approach is running the company into the ground. However, you also will have to be ready to take a big share price hit as its P/E multiples come into line with the rest of the industry.
Because the reality is that Tesla's massively inflated share price (and, hence, market cap) depend on Musk's presence. For now, that is. As we move closer to 2025, the share price is likely to continue grinding down. The Musk magic is already wearing off. And there are, of course, big risks lurking with fraud litigation over FSD, personal injury lawsuits, the DOJ, the NHTSA, the SEC, etc. Not to mention what I regard as the certitude of continuing litigation over Musk's compensation.
The non-cultists who will vote to ratify the compensation package fear, more than anything, a rapid drop in the stock price. The smart ones will tiptoe out, probably before the June 13 vote and certainly before the Q2 results are released and the horror show of August 8 arrives. The index funds, alas, are stuck. They (and the millions of small investors with retirement money parked in index funds) will suffer the most while deserving it the least.
Thank you for this. What Tesla is doing makes little sense as a car company, but I see shareholders might be petrified about how it lands back to earth with minimal damage. I'm not an investor - so, I am merely an observer.