Lucian Bebchuk

Zohar Goshen responded to my column with Rob Jackson, "The Elephant in the Tesla Boardroom”  (promarket.org/2024/06/06/the…) that we have a “mistaken concept of what is a threat” and that “bargaining power is not a threat but a legitimate negotiation." Zohar: Musk said he’s “uncomfortable growing Tesla to be a leader in AI [...] without having ~25% voting control.” Might not some investors be concerned that these are not negotiations using a threat not to bring AI assets Musk has outside Tesla to the company, but rather a threat not to develop some AI assets/projects that Tesla has? Should the board have asked Musk to clarify? And even if these are “legitimate bargaining,” presumably with the board, why didn’t the board explain to shareholders how they were influenced by it when deciding to bring a vote for restoring the old award? Also, in this case, why didn’t the board get Musk to commit to bring AI projects into Tesla in the event that the restoration takes place? (For full disclosure, as noted at the bottom of the column, I have served as an independent expert for the plaintiff in the Tornetta case.) @Tesla @elonmusk @andrewrsorkin @ZoharGoshen @RonBaronAnalyst @jimcramer @CathieDWood @profEricTalley @Tony_J_Casey @AnnMLipton @shiva_rajgopal @adamwinkler #Tesla #ElonMusk #TeslaInvestors #TSLA #ShareholderVote #CorporateGovernance #InvestorInsights

Rob Jackson and I published on the University of Chicago’s ProMarket forum three posts on the governance of Tesla at this critical juncture: “The Elephant in Tesla’s Boardroom,” available here (promarket.org/2024/06/06/the…),  explains how Musk’s threat to move AI projects outside of Tesla, and the Board’s failure to get Musk to withdraw this threat, may distort the decisions of Tesla investors in the ratification vote this week. “Tesla Investors Deserve Musk’s Attention,” available here (promarket.org/2024/06/07/tes…), shines light on a key flaw of Tesla’s current strategy with respect to Musk’s pay; this strategy would fail, as Tesla has failed in the past, to limit the time and effort Musk spends on endeavors other than Tesla. Rather than ask stockholders to hope that Musk would focus on the company, Tesla’s board should seek contractual limits on the time and effort Musk spend on such outside endeavors. “Tesla is Short on Director Independence,” available here (promarket.org/2024/06/08/tes…), argues that insufficient attention is being paid to the board’s failure to use the coming meeting to bolster board director independence and thereby address the serious “controlled mindset” problem stressed by the court decision. Altogether, the posts in this series show that, in the aftermath of the Delaware court decision invalidating Musk’s large pay grant, Tesla’s Board is not trying to learn form the decision and improve its governance. To the contrary, the Board seems to be doubling down. Any comments would be most welcome! @Tesla @elonmusk @Teslaconomics @andrewrsorkin @ZoharGoshen @RonBaronAnalyst @jimcramer @CathieDWood @evafox @SteveSosnick @neiltyson @SawyerMerritt @ICannot_Enough @TeslaBoomerMama @DogeDesigner @GailAlfarATX @MarioNawfal @dhaval_shroff @jhall @heydave7 @stocktalkweekly @wholemars @medicgordus @RJarborg @KanekoaTheGreat @annmlipton @profEricTalley @Tony_J_Casey #Tesla #ElonMusk #TeslaInvestors #TSLA #ShareholderVote #CorporateGovernance #InvestorInsights

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