Subject: Re: 13F : More Chevron
Jim wrote:
The key smoking gun was the quote from the head of the comp committee, included in the judgment twice: “We were not on different sides of things. We were trying to make sure if we were going to go through this exercise that he was on board.” In short, it was a stitch-up.

Suppose you were on the board and chaired the compensation committee at Berkshire Hathaway. You have been sued by a Berkshire Hathaway shareholder for not properly representing her interests in agreeing to pay Buffett $100,000/year. After your shock that a Delaware Chancery Judge would take such a ludicrous and useless case, you were called to testify. Which would you be more likely to say:

A) “We were not on different sides of things. We were trying to make sure if we were going to go through this exercise that Buffett was on board.”

or

B) "We determined that due to his stock holdings that Buffett was already sufficiently motivated to work for free. As such, it would be wrong of us to pay him $100,000 a year just because he refuses to sell any of his shares to pay for his McMuffins. Who does he think he is? We are not his lapdogs."

Musk was granted options that were valued at $2.8 billion in 2018, but which were ultimately worth $55 billion AFTER the market cap of TSLA was increased by $550 billion. Neither $2.8 billion nor $55 billion are $100,000 a year, so that might be material.

On the other hand, the idiot judge literally wrote in her idiot decision that Musk was adequately motivated to work without being paid due to his 20% ownership of Tesla, and that the compensation board agreed to a compensation plan that gave Musk as much as 10% of the value increases he presided over was proof that the board was not independent.

Perhaps you are thinking, "Musk is no Buffett. These are not comparable situations. Buffett has built something in Berkshire that if anybody else could have built it, they would have. Buffett is one of a kind. OF COURSE the job of an independent board would be to pay Buffett perhaps even as much as 50% of the value he creates, and if Buffett is happy to work for less, an independent board's job should be to jump up and down and ring the church bells and proclaim their love for Buffett, and that does NOT mean they are not independent."

Well, how many human beings since 1945 have presided over building a profit making car company from scratch? I'm pretty sure the answer in the US is zero. Maybe Canada or the USSR has a guy we never heard of? Maybe that guy at BYD should count too, but BYD makes a lot of money from gas-powered hybrids, while Tesla does it with nothing but electricity.

Does anybody anywhere who isn't completely blinded by dislike of Musk imagine that anybody else could have lead Tesla to $550 billion market cap growth since 2018? If you were on the board of Tesla (heaven forfend!), heading the compensation committee, would you not consider it your sworn duty to jump at a deal where Musk gets paid nothing if he only doubles the Market Cap, but where he will split the gains with the shareholders 90:10 if he delivers a 10 bagger? Would you really imagine you were in Musk's pocket for doing so? Would you EVER credit the Judge's idiotic suggestion that Musk would have worked for free when he has so many other companies and investors?

How would you like it if the court came after Buffett's $100,000 a year because the Berkshire board was not independent, and claimed they were doing so to protect the BRK shareholders?

So Jim, I know you dislike Musk for very rational reasons. But I believe you have a Judicial temperament when you want to. And my question to you is:

How can you not dislike this Judge and this ruling at least nearly as much as you dislike Musk?

Thanks for weighing in!

R:)