The board members have collectively agreed to return more than $735 million
let's all just have a little dip in the till here shall we................
I never knew Tesla was an acronym for These executives siphon loot alarmingly.
Tesla's board of directors has settled a case with shareholders who accused its members of awarding themselves oversized compensation packages. The board members have collectively agreed to return more than $735 million to the electric car maker's coffers in combined options, cash and stocks. As is often the outcome in …
By way of contrast, the independent directors of Berkshire-Harhaway -- net worth just under $1T in 2022 -- are paid either $3300 or $7300 a year. They include Bill Gates and a number of other folks with fairly impressive sounding bios. I'm not sure what that indicates. Maybe that you don't have to pay a lot for quality. Or perhaps that directors don't contribute much of value to corporate operations.
@vtcodger: It means that non-execs are (in their world) paying for the privilege of being associated with Berkshire Hathaway, whose founders and key personnel are hugely respected for their competence and probity. Berkshire have enjoyed the most impressive long term run of results of almost any corporation, and those results are based on sticking to the principles of the founders, and are not driven by investor gold rushes, dubious business practices or clever yet maniacal and erratic leadership (Musk, I'm looking at you).
If some far-sighted relative had on my first birthday gifted me $30 of the then newly established Berkshire Hathaway shares, then without paying in a further penny I'd now have a retirement pot over $1.1m, thanks to a compound annual growth rate of 19.8% for sixty odd years. If they'd invested thirty quid then after the two way FX, I'd be sitting on £2.6m.
For anybody with an interest in business management or investment, Berkshire Hathway's annual letter to shareholders is always worth a read.
Berkshire Hathaway's wealth is based upon them spotting the potential in the rigged US insurance market - as reported here many years ago. Hats off to them for spotting it, but lots of people think "The Sage of Omaha" is some sort of miracle stock-picker - they have an enormous float from identifying that this is possible and picking up all possible companies with floats, and invest that float in low risk stocks. Trebles all round, but impossible to replicate those sorts of returns now if you gave them a blank slate and $1bn to invest.
What board members can and should do is a mix of the country's laws and the company's articles of association. They are elected by the shareholders so in theory they are the people that shareholders believe will give return them the highest dividends while maintaining the value of the stock. In practice large numbers of small investors organise badly and risk getting ripped off by a small number of large investors. When there is are large amount of money involved, board members may work very hard at making sure the in group get a fatter proportion of the money than the out group.
Board members should be personally liable for corporate misdoings as they are the ones overseeing it.
Once their ass is on the line, they may take a little more care as to what is going on and actually earn their money.
So often we see the company fined, but in my eyes it should be the Board members and upper management who take the can in exchange for these eye-watering compensation schemes.
As the trustee of a charity, (we are all unpaid trustees in this charity, and many other charities are the same), I could take the can, as was pointed out in a very long meeting just last night, and yet we hold a very similar position to a board member of a company. So how can company bosses hide behind corporate responsibility?
It appears you are not familiar with the difference between exec and non-exec board members.
Non-exec directors do largely just attend quarterly meetings, ask a few questions and trouser their pay.
Exec directors, which are much commoner, are the most senior people in a business and often work very hard and very long hours. I work for a very large UK company you will all know and I know three of the exec well. They work very hard and while they are very well paid, they earn their money.
> Musk's brother, Kimbal Musk, Oracle founder Larry Ellison, and Rupert Murdoch's son, James Murdoch.
Who could ever think that anyone with such squeaky clean histories, never even been *near* any iffy business practises, could ever even think of enriching themselves at the cost of others!
Robyn Denholm is more of a mystery (i.e. no obvious connection to misdeeds, which is what makes a name easy to search for); maybe she just got mixed up with a bad crowd.
So musk will do anything to stop the workers who actually make the cars an extra $1 but allows the board to take hundreds of millions ?
The bonuses could have paid for every worker on the production line several times over, the production numbes would actually increase unlike board members who are nothing but parasites that produce nothing and take in this case hundreds of millions.
The bonuses could have paid for every worker on the production line several times over, the production numbes would actually increase unlike board members who are nothing but parasites that produce nothing and take in this case hundreds of millions.
You're making the mistake of assuming Tesla is an automotive company, and not that the main business is financial engineering and derivatives trading. It makes more from selling EV credits than it does from selling vehicles. Most of Musk's businesses work the same way and rely very heavily on subsidies for their continued existence. Thus having a board that keeps the pork rolling is vital to protect both the company, and the boad member's interests.
But I learned something new from the filed complaint-
Tesla determined not to renew its directors and officers liability insurance policy for the 2019-2020 year due to disproportionately high premiums quoted by insurance companies. Instead, Elon Musk agreed with Tesla to personally provide coverage substantially equivalent to such a policy for a one-year period, and the other members of the Board are third-party beneficiaries thereof.
That.. not a good sign. Insurers tend to drop hints like that in a "We don't want your business" kind of way. Too risky. I think there's ongoing litigation around the murky friends & family business when Tesla took over Solar City as well.
Yeh, there are also a lot of bungs on offer to roll out charging stations. It's a strange way to enter the market though and they might do 'better' buying an established business like Econtricity, except I think they flogged off their EV charging business to avoid bankruptcy.
So we have excess compensation of $735 million (so that's not the total compensation, just what was considered excessive!).
$735,000,000.
What do we think the profit margin on a Tesla is? A Tesla sells for what €50,000 give or take. Lets assume that like Apple it is able to charge a higher profit margin then the likes of the standard car companies, lets be generous and say 10% margin per car. So $5,000 profit per car sold. I would suspect it would be less as most cars have a profit margin in the realm of 1-2%, but lets go with that for some nice round numbers.
$735,000,000 / 5,000 = 147,000.
I'm so glad that those Execs were able to shift so many cars on there own. Nearly 150,000. I mean that's why they were getting that level of comp, right?
Just think of the mentality that thought that was an acceptable level of payment in the first place. Crazy, no?