The rewards were reasonable when they were agreed to. I think the shares were only worth $50 million total. The fact it increased in value so much is the result of him meeting those milestones.

Why is that not reasonable.

Please correct me if my understanding is wrong here, but isn't the current situation after the judge nullified his comp package now that he has done a phenomenal job growing the company, has taken $0 in salary for the last 5 years, and is now receiving no stock compensation either?

Sure $50bn+ is unreasonably large, but isn't $0 unreasonably small?

He negotiated the $0, that sounds like his problem.

If any regular person negotiated an underpaid salary at their job the past 5 years, and then demanded to be paid extra, that would get laughed out of the room.

Yes, but he didn't negotiate $0 in a vacuum, I assume he was factoring in the performance-based stock compensation too, in agreeing to take $0, no?

He agreed to forgo one type of compensation in favor of another type, that was later yanked away from him under the reasoning that his compensation package was deemed retroactively excessive.

I imagine a scenario where I take a slightly lower base pay for a higher number of RSUs, that are only unlocked if I meet my performance goals. I then proceed to meet or exceed these performance goals, as the contractual agreement specified. And then the government, acting on behalf of a shareholder who used to hold 8 shares total, complains that my compensation package was retroactively excessive, even though he hadn't raised this concern earlier.

I'd feel unfairly cheated in that scenario, and I can't help but figure Elon probably feels the same way. I know he isn't going to starve to death or anything, but it seems bizarre and worrying to me that it's just perfectly fine to invalidate what was a perfectly fine and legal contract 5 years after it was signed because a minor stakeholder of one party to the contract didn't like the terms.

Does this undermine the trustworthiness and stability of executive compensation contracts, or really any compensation contract, broadly in the US? Do I ever need to be worried about getting rug-pulled the way Elon was?

I fear this precedent may be abused against "the little guy" / the working class in the future.

He can negotiate a new package. Besides he has plenty of money. If he spends a million a day he won't be broke for several lifetimes.

Can he? How can he know whether the new one will or will not be retroactively invalidated 5 years from now? Do all executives need to get permission from a sitting judge before signing a contract now to be sure it's not going to be retroactively invalidated in the future?

> Do all executives need to get permission from a sitting judge before signing a contract now to be sure it's not going to be retroactively invalidated in the future?

All public company executives need to get their pay package approved by a real board that can actually tell them no (or at least sound like it in the minutes), not a handful of fawning sycophants. Or, if their board is actually a handful of fawning sycophants, they need to not lie about that when describing the pay deal to shareholders. Or they can take their chances on what a judge may think in the future. Doesn't seem unreasonable.

Don't the shareholders elect the board members?

Up to a point. Tesla has a staggered board, which is well-known as a technique for making it hard for shareholders to control the board, and in general it's very rare for shareholders to vote board members out even in companies with more shareholder-friendly charters. Support for Tesla's directors in their most recent election was well below the median, partly because ISS had recommended voting against them (which is again unusual), but didn't reach the level of removing them.

I didn't realize it wasn't as cut and dry as a simple majority vote among shareholders, thanks for teaching me something new :)

> How can he know whether the new one will or will not be retroactively invalidated 5 years from now?

Get a real board to negotiate and approve the package. Boards and CEOs are already buddy buddy, but this is so far beyond even that. Heck, one of the members is Musk's brother - not even trying to appear objective. Musk's hubris bites him again.

https://theconversation.com/why-elon-musks-self-driving-of-t...

USD 0 is perfectly fine given he owns a lot of TSLA stock already.

See also: Zuck, Jobs, Larry Ellison. Not an entirely atypical arrangement.