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The Dark Stain on Tesla's Directors

Tesla's Board is attempting to award Musk compensation that is obscenely unfair, using a proxy statement prepared with a flawed process and containing egregiously inadequate disclosures.

As jaberwock has explained in an astute analysis, assuming the rescinded options were restored, then upon their exercise, Musk would need to sell more than half of the 304 million shares he receives in order to pay the strike price and taxes. This decision likely was motivated by Musk’s impatience to secure a shareholder vote before the Chancellor could make a final ruling in the case (the issue of legal fees remains to be decided), and undermines the integrity of the process. Even worse, the proxy materials omit this information while at the same time boasting of “our progress in artificial intelligence via full self-driving and Optimus.” If the Board failed to discuss these issues with Musk, then that failure is a colossal breach of fiduciary duty.

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