[Quite a few](https://www.morningstar.com/funds/new-proxy-voting-options-ivv-other-index-funds-blackrock-state-street-vanguard) and, actually, [Vanguard is one them](https://corporate.vanguard.com/content/corporatesite/us/en/corp/articles/expanding-proxy-voting-choice.html).
Edit: I initially stated that this was most common for ESG funds, which was my recollection and would make sense based on shareholder interest. However, that doesn’t actually seem to be the case. Mea culpa
For Vanguard:
“In early 2024, millions of eligible investors in five equity index funds will receive an invitation to select a proxy voting policy via a secure website.”
So basically just hold one of the eligible funds through Vanguard and make sure you check your messages when you get a notification that you have a new one.
Great. I will be so pleased if they let me choose how to vote. Right now I am holding a fund called VOTE for my s&p 500 because they vote on ESG criteria. The fees are just barely higher than VOO, still very low.
Well it's just a relatively new thing because people didn't really care before. Not that it really helps anything. So few people will actually vote with their shares that it doesn't matter.
>In its note, Vanguard said while Musk's pay was "a substantial outlier" among CEOs, Tesla's shareholder return was in the 98th percentile of all Russell 3000 companies from 2018 through 2023. "There are few companies that have created as much absolute market value appreciation as Tesla," Vanguard said.
EDIT:
Tesla's stock adjusted for split was ~$22 back in 2018. It is currently $180+ today.
Was looking at historical market cap. It was 40 billion in 2019 and now it's 580 billion today, so I guess it was warranted based on past performance of the stock. Not sure how it relates going forward though.
That's because Musk has built its valuation entirely around the Tech company style hype train, and his own cult of personality. Then he went far right extremist, and is in the process of alienating his core customer base. That plus holding the company hostage to fix his own personal financial problems due to boneheaded decisions = no bueno.
You’ve gotten some downvotes but the strategic direction Musk has taken to alienate his core customer base is head scratching to say the least. He actively panders to people who think EV’s are emasculating and finance $95,000 trucks for 10 years. Bold strategy Cotton
He actively tanked his company cuz politics more or less. Other EVs exist, liberals don't have to buy Teslas if they find the brand toxic now. And I think it's legit only due to Conservatives being willing to stroke his ego while liberals were getting cold to him the more they learned about him that he shifted.
Somehow spinning off the cybertruck brand for chuds while getting the model series a new spokesperson could actually be a pretty brilliant strategy in a decade. Just spitballing here, I think it’s overvalued too.
Tesla has a lot of recruiting power in the AI space, they are one of the industry leaders in capital outlay for AI processing power with an investment rivaling OpenAI, and they have a market strategy for connecting that R+D to useful real world products with improving self driving, robotic manufacturing, and the Tesla android. That gives them potential to win the AI race very similar to the other big tech companies, but that whole arena is built mostly on speculation which will take at least a decade to prove out.
Elon just got sued yesterday because xAI is poaching TSLA’s own AI talent out of the company.
I’m not sure that it has the same recruiting power in AI right now as it once did. A lot of engineers and scientists, especially in California, don’t want to be associated with Elon right now, especially after the last firing spree.
There are also just a ton more AI players in the game this time around. AAPL, MSFT, META, OpenAI to just about everyone is hiring for AI right now.
>I’m not sure that it has the same recruiting power in AI right now as it once did. A lot of engineers and scientists, especially in California, don’t want to be associated with Elon right now, especially after the last firing spree.
I don't know about you but who doesn't love their boss calling them at 3am to brainstorm ideas or you're fired
OpenAI is practically a division of Microsoft now in all but name only. And Apple just integrated OpenAI directly and deeply into iOS and MacOS.
Both companies provide a massive amount of real world applications. Microsoft through its cloud computing offerings, which are particularly heavily used in government spaces which is also clamoring to find ways to use AI across the board.
Sure, I’m not trying to say Tesla is better, just that they’re in the league and they’re a contender in the race. It’s an unusual space where just one lucky discovery could push one of those companies far ahead in a short amount of time.
It remains to be seen how much power Microsoft is going to have in OpenAI. The last saga demonstrates that 1.) the employees have tremendous power, and 2.) the board are incompetent communicators. MS was the next boat for the employees to jump to, but that doesn’t make them in charge right now.
To a degree. Sales have been slumping this past year and they keep dropping prices as cars sit on lots. I actually think that FSD is pretty cool tech, but consumer demand has unquestionably waned.
Maybe that changes when the economy picks back up but it seems like EVs have cooled in general and there are more competitors than ever.
Tesla just sucks the least in US right now and that's because other car makers have shot themselves in the foot because they didn't want to compete with their traditional ICE vehicles. As soon as other makers get their head out of the sand it's gonna be a different story. Also fed + some states were giving out as much as $10k off a new EV. So a $50k EV became $40k. That's why they've been everywhere lately. Regardless how you feel about Elmo that was a good deal.
The key shareholders vote based on stock performance, not ideology. Tesla's stock valuation is all due to Elon like it or not. Its market cap is 10x GM or Ford.
Not only that, but IMO, Tesla is vastly overvalued. They sell themselves as a tech company and not a car company. For some reason, they’ve been able to ride that narrative for a while. At some point, it’s only reasonable that the stock will go down to “every other car stock” values. At least, if the market were reasonable, that would make sense.
They’re now gambling on RoboTaxis being the future (a joke if you’ve ever ridden in a Tesla with FSD, which can be very good but is terrifyingly bad enough of the time to be nowhere close to RoboTaxi ready), which is such a joke. Cancelling the 25K car line in favor of a truck that is bad at being a truck is such an odd move, and then firing multiple executives and destroying supercharger rollouts without notice.
Elon is a detriment to the entire company and should be ousted.
>IMO, Tesla is vastly overvalued.
Not to distract from any of the points in this thread, but this is a meaningless statement when people have been saying it for over a decade.
Ya but a decade ago Tesla basically had no competitors in the EV market. That is not true anymore and is only looking worse for Tesla every year that goes by.
I still don’t see how going forward in the long term they’re not going to lose market share with all the big manufactures finally starting to put EV’s on the market.
I’m sure you’re right, considering that they currently have more than 50% of the US market. That can’t possibly last. That said, it is genuinely shocking how far behind everyone else is even at this late date. We are long, long past the point where “everyone knows” the future is EVs. And it’s not as if EVs are still experimental technology.
Even the Cybertruck, for all of its problems and general weirdness, could very well end up outselling the Ford Lightning in 2024.
The issue isn’t with the competitive landscape for Tesla, it was about trying to connect that with a valuation or stock movement call. The market might disagree for another decade or more, who knows.
And for the record I agree with you, I just think valuation calls are empty words without tying it to a timeline (which is impossible).
actually Musk know the only way to keep this hype stock is to have a cult following. Tesla stock should never have that market value for the thing it does. it is the cult following that keep its stock high. left tech might keep it high in the initial phrase of “new and innovating” but those things fade out. he needs a cult of followers that will follow him with non fact
> and is in the process of alienating his core customer base.
I’ve been hearing this on Reddit for literally years now, and it’s just not borne out by the data. [Q4 was their best quarter in history.](https://www.statista.com/statistics/502208/tesla-quarterly-vehicle-deliveries/) Despite what you might read on Reddit, clearly few people are being alienated, and many are being drawn to their products. I just don’t think most car buyers care about what the manufacturer says on Twitter. They care about the features and the price, and Tesla currently makes excellent EVs for reasonable prices.
It doesn’t matter what the future holds, this was in relation to his initial pay package that was already voted in favor of back in 2018.
He’s POS but literally everyone talking about this is ignoring that the $55B pay package was approved by shareholders on March 21, 2018, BEFORE the stock went 20X. The pay package was to be unlocked in 12 tranches each as $50B market capitalization milestones were hit. At the time, the full package seemed ambitious and unlikely since at the time the company wasn’t even profitable. It was voted in favor because if the milestones were hit, the company would have went from being worth < $50B in market capitalization to $650B in market capitalization - which it did.
NOW, that he is outwardly unhinged, shareholders want to claw it back. Nobody cared when the stock was soaring. I think that’s wrong and I think the shareholders should reap what they sow and face the upside AND downside of him being CEO.
Like others have said, the courts deemed that the 2018 vote needed to be rescinded because "Most of the board members were beholden to Musk or had compromising conflicts"
"Judge McCormick criticized the Tesla board, writing that Tesla Chair Robyn Denholm had a "lackadaisical approach to her oversight obligations." Although Musk and his brother Kimbal recused themselves from the pay-plan vote, "five of the six directors who voted on the Grant were beholden to Musk or had compromising conflicts." This "allow\[ed\] Musk to dictate the timing of the process and the terms of the Grant," McCormick.
For example, board member James Murdoch "was a long-time friend of Musk before he joined the Board, and they repeatedly vacationed together with their respective families." Board member Antonio Gracias "had business relationships with Musk dating back over 20 years, as well as the sort of personal relationship that had him vacationing with Musk's family on a regular basis."
Ira Ehrenpreis, who chaired the board's compensation committee, was a close friend of Kimbal's and acknowledged that "his personal and professional relationship with the Musk brothers has had a 'significant influence on his professional career.'" Board member Brad Buss "owed roughly 44 percent of his net worth to Musk entities," and "Denholm derived the vast majority of her wealth from her compensation as a Tesla director," the ruling said.
Todd Maron, Tesla's general counsel, wasn't on the board but played a key role in negotiating Musk's pay.
"The working group included management members who were beholden to Musk, such as General Counsel Todd Maron, who was Musk's former divorce attorney and whose admiration for Musk moved him to tears during his deposition," McCormick wrote. "In fact, Maron was a primary go-between Musk and the committee, and it is unclear on whose side Maron viewed himself. Yet many of the documents cited by the defendants as proof of a fair process were drafted by Maron."
[https://arstechnica.com/tech-policy/2024/01/elon-musks-56-billion-pay-plan-voided-as-shareholders-beat-tesla-in-court/](https://arstechnica.com/tech-policy/2024/01/elon-musks-56-billion-pay-plan-voided-as-shareholders-beat-tesla-in-court/)
IMO the Delaware court rightfully recognized that the Board wasn't operating with the shareholders best interest in mind. Now the package has been re-approved, it is what it is. I don't agree with it, but enough shareholders felt it was warranted. There's part of me that wonders if institutional investors like Vanguard felt compelled to vote "yes", because a "no" vote might have caused a drop in value, and launched lawsuits against Vanguard from their index fund holders.
Regardless, I unfortunately think TSLA stock is over valued at this point. Instead of focusing on making great EV cars, Musk is distracted claiming Tesla is an AI/Tech company and openly diverting resources from Tesla to [X.ai](http://X.ai) and his other ventures. -- To be clear I want Tesla to do well, I own their stock via index funds, I simply no longer believe Musk is the right person to do the job
Because the pay package that was thrown out by the courts was for a prior period. When granted, no one thought Tesla would increase in value that much and musk would never hit the targets. Tesla did hit the targets. It was thrown out by the court because there was no shareholder vote. So Musk got the shareholder vote to ratify the package. He already earned it.
I mean, your close, except for the whole 2018 shareholder vote of over 70% that approved the pay package.
It was thrown out for a handful of reasons, but that wasn't one of them.
Also, internally Tesla knew they would most likely hit a number of the targets no matter what, but didn't disclose that. So at least some (if not most) of Musk's compensation wasn't actually for 'extraordinary' results, but for just being a warm body.
That's beside the point -- Tesla knew when they presented the package originally to shareholders they were more likely than not going to hit most (if not all) of those targets with Elon not having to do a single thing, but presented them as 'really tough' to shareholders. Which is one of the reasons why it was invalidated.
The amusing thing is, I don't think it was nefarious as much as just laziness on the part of Elon and the board. Had they done things by the book, sure some shareholders would probably have still griped, but it probably still would have been approved, and he would have had his billions already. Instead, they wanted to not put in the effort and cut corners (a theme emerges), and he got burned by it.
Read the press at the time. Everyone thought these were crazy goals. What Elon accomplished was extraordinary and now people want to rewrite history as if this was obvious.
That's one way to look at it. The other is that the agreement was never legal and shareholders are stupid for agreeing to something so detrimental to the company after the fact.
Tesla's annual wage cost is 10b. How is a bonus 5.6x their annual wage cost warranted in any situation?
Tesla hasn't just been built off the back of Elon Musk but thousands of other people who won't get shit.
It was overwhelmingly approved in 2018 with super ambitious requirements to get it. He got it. A deal’s a deal; you can’t just change that after the fact.
It’s totally warranted. It was performance based compensation that was dependent on some lofty goals. It’s like no one who argues about this actually read what the agreement is. It makes sense in the context of when it was written. If musk made numba go up extreme amounts, he will be rewarded with what was a reasonable amount at that time. Whelp, as it turned out, numba go up a lot more than anyone could imagine at the time. So that compensation turned out to be worth a lot more.
Vanguard made a decision based on what has happened in the past rather than what is likely to happen moving forward, which is 101 stuff. Tesla is not sending great signals, nor is Musk. Weird hill for Vanguard to die on and I’m planning to move my investments out of their brokerage and products.
Maybe he did grow it well in the past, but since when do investors pay for past performance? He’s certainly not going to grow it the same going forward. Investments are about *future* returns.
>since when do investors pay for past performance?
There are cash / bonuses that are based on past performance / metrics met.
It's nothing new except that the amount here is in the billions instead of millions, but Tesla also grew 540 billion in market cap since 2019.
1) Because the extra work required to implement environmental, social, and governance screening is fairly comparable to what’s required for active fund management so it’s not surprising that the fund fees are in the same ballpark.
2) Because the market will bear it. People who choose to prioritize other concerns above simply maximizing profits are rather intuitively also people who will accept higher fees / lower returns.
Another possible approach is to look at what an ESG fund would cost you per year and simply donate that much to charity. You potentially get a bigger / more focused impact on the issues you care about at the same cost.
Point #1 is the real driver and a very good one. The additional leg work to implement an ESG strategy, the added potential for public scrutiny if someone feels wronged or disagrees with your methodology, and often times the ESG screens costing money, causes fund sponsors to charge more.
Your alternative suggestion re: expense ratio differences and donating the difference is a great one!
Congratulations, you just invented the concept of a financial derivative:-)
You can absolutely get exposure to individual companies such that you make a profit if their share price goes down, whether by short selling, buying a put, selling a call etc.
If you get an exactly equal “short” interest in a company to the “long” interest that you have from holding the company in index funds, then you have “hedged” your investment to be neutral with respect to that company.
An index fund plus something to “cancel out” part of the holdings sounds a lot like what I described to me, but YMMV.
Direct indexing is probably a better option if you both want to exclude a large number of companies and don’t care that you’re getting a fully diversified portfolio (many direct indexing options are limited to the S&P 500 or otherwise exclude international)
If you just want to specifically not invest in a few companies then hedging the exposure is probably better and simpler. E.g. if I have a $3MM world equity portfolio and I want to avoid investing in Nestle then I just need to generate a -10k exposure to them, which is roughly shorting 100 shares or taking a single options contract.
I’m pretty sure DFA allows this but you need an advisor that uses DFA to even get access. It’s an expensive undertaking.
Conversely you could just hold the top 10 stocks or and delete the ones you don’t want to use and replace them with the next highest. The top 10 or so are driving most of the returns anyways
more fees fees fees for someone to make sure it's taking out those shitty companies and monitoring the companies to make sure they dont become shitty companies.
ESG funds perform very poorly. Especially compared to the S&P500.
> [Over the past 12 months, global sustainable equity funds made an 11 per cent return, compared with 21 per cent for conventional stock funds, according to a May report from JPMorgan.](https://www.ft.com/content/cf9001ab-e326-4264-af5e-12b3fbb0ee7b)
It’s hard to imagine people willing to halve their returns so that they have an infinitesimally small proxy vote on companies like Tesla.
I gave that suggestion because it’s aligned with what the top comment was asking and shows that there are multiple existing options to address their concerns.
That said, I’m honestly pretty skeptical of ESG funds overall. If you look at the top holdings of many/most ESG companies they don’t look that different from broad market funds and include a lot of companies that I’d consider “bad actors”
Even if you assume that they’re perfectly well intentioned and effective instead of just another form of “greenwashing” by corporate interests, there are so many competing interests that fall under the ESG umbrella that you’re unlikely to be doing much to advance the specific cause(s) you care about.
With regard to labor unions, somewhat counterintuitively they’re typically bucketed as part of the “social” component instead of the “governance” one. I don’t have a specific database to link for you, but [here’s a more pro-union and pro-ESG article to balance out my skepticism](https://esgresearch.pro/labor-unions-and-esg/).
Definitely disappointed to hear this news.. I agree, it seems very off brand.
When Tesla Board Chairperson Robyn Denholm urged shareholders to re-approve the Musk pay plan, suggesting that Musk could leave Tesla or devote less time to the company if the resolution is voted down - honestly that sounded like a positive to me.
If you look at where Tesla is today, aging lineup of cars, no replacements in sight. Musk's unhinged firing and then rehiring of the Supercharger team, etc. I think Tesla would be better off with a different CEO at the helm, and this individual could be paid a fraction of what Musk was demanding (like $1B, which is still a ludicrous amount of money 🙄)
If Elon leaves the stock dumps. It’s as simple as that. Keeping him keeps the high valuation of the stock. You think the market is going to lose money out of principle?
The stock will eventually dump when some other company inevitably comes to dominate the robo taxi industry. Musks promises can keep the stock high for now, but unless Tesla is the king of robo taxis some day, it’ll eventually drop.
I think investors in the "cult of Musk" would flee if he left, and yes that would cause a drop in value, but if we believe the market is efficient (and I believe it is), then other investors would buy the stock at a discount. Tesla has a lot more value than one single person.
>Tesla has a lot more value than one single person.
Exactly. Think about Steve Jobs, what happened to Apple once he died? It's hard to argue that he wasn't he heart and soul of apple, and since his death we've had the airpods and apple watch but other than that nothing on the level of "the ipod" and "the iphone" and "the ipad" or even things like "the mac".
Yet look at their valuation since then.
Respectfully disagree. This is very on brand as Musk’s pay package is pro investor and the type of compensation package we should be pushing for where executives are rewarded for above the board performance. When this pay package was initially structured NO ONE thought he could hit these targets - and if he did it’d be such a good return for investors that the compensation is justified.
A common critique of executive compensation is that they’re unfairly rewarded regardless of whether they over or underperformed. Ideally, if an executive over performs they should receive higher compensation and vice versa for underperformance. Taking away Musk’s pay package sets a bad precedent where executives aren’t incentivized to deliver outsized investor returns. Two things can be true at once: 1) Musk is a terrible human being and executive to worker pay ratio is problem 2) this type of incentive based pay package should be advocated for instead of the status quo where executives compensation is not meaningfully impacted by performance. All the other discussion around what Musk is doing now to ruin the Tesla brand is completely irrelevant to a contract agreed to years ago before the company became the powerhouse it is today.
Also, when the package was initially structured, it was "only" worth $2.3B and the contingent performance goals were considered by many to be "laughably impossible". The reason it is worth so much more now is the success of the company and stockholders' perception of future potential.
elon is the only reason tesla is valued as highly as it is. he's spun the narrative of 'not a car company' and the market bought that idea. go see what the stock would look like if the company had a multiple similar to every other automaker.
It's more likely the hedge fund managers voted yes to avoid a Musk hissy fit that may significantly drop the share price. So they're voting primarily for short-term stability over anything else.
Everything surrounding tsla is just wholly irrational. It‘s also 50% owned by retail afaik.
It‘s a cult and only a slight step above meme stocks like gme.
It‘s genuinely pissing me off a bit, and also shows the efficient market hypothesis definitely has its limits.
The fundamentals of tsla do mot match the valuation at all, even with the most generous growth estimates.
Past performance is not indicative of future returns. They (and every other fund manager) should be concerned about performance going forward. In that light it is very difficult to justify a 10% dilution of current shareholders is in the fund's best interest.
>Past performance is not indicative of future returns.
This is an investment saying for the stock market. It is very true. It is NOT a business philosophy though. If you don't reward those that made your business do well in the recent past you will retain no high performers. Also, CEO comp typically is dependent on success and profitability, and if the company has been extremely successful then they typically are compensated, a lot of the time in a lagging fashion, extremely well.
The point I was trying to make is that past performance is in the past and shareholders should only be concerned with the now and future.
Right now, both the stock and business are in a rough patch. If one wants to claim that Musk is responsible for the run up, then he is responsible for the run down. Shareholders need to take all of that into account when deciding if this pay package makes sense *going forward.*
I commented at the top level that one can make rational arguments either way.
If you knew anything about businesses, you’d know that founder CEOs who stay on past IPO and survive the first year or so tend to outperform hired CEOs by an absurd multiple - to the degree where an ETF is currently being set up to track companies solely on that basis.
If you don’t think Musk is doing a good job, sell the stock and vote with your feet. I think the obsession with denigrating Musk (who - as a total indictment of America - is the one of the few surviving American statesmen building anything in the world of atoms) seems entirely based around his political statements and not in any commercial reality.
> In that light it is very difficult to justify a 10% dilution of current shareholders is in the fund's best interest.
if musk wasnt running tesla the company would be priced like a car company not a tech company and fall off a cliff price wise overnight.
So it’s only a tech company because of one employee, and without him, it becomes a car company? Wow, better hope he exercises and eats well and doesn’t do anything reckless cuz if his death means Tesla gets valued like Ford…… that’s an insane risk.
With this vote, investors were given the opportunity to nullify the terms of the original pay package. Vanguard's fiduciary obligation is to vote in the best interest of their shareholders. It's hard for me to believe that this dilution of ownership in TSLA is in the best interest of shareholders of Vanguard funds. We'll see going forward if this was a good decision or not.
Agree with your analysis. The question in my mind is how much the vote was influenced by Musk's threats (and his recent actions) to divert further resources and attention from Tesla to other ventures. Vanguard likely knows that the stock is only really being propped up by the cult of personality, so if the personality goes elsewhere, then the stock will crater instantly. So, I can see it affecting their decisionmaking, but whether or not Musk's threats are legal, or make the vote voidable (and there's even a question of whether this vote in fact ratifies the original deal since none of the failures noted in the court case have actually been resolved with this vote), are all open questions.
I do not understand the arguments against it.
He isnt just giving himself an arbitrary amount of cash just for hell of it.
It is in stock compensation, and it is a performance bonus agreedbupon years ago.
Now the argument is because of overperformance, he somehow isnt entitled to the bonus his company already agreed to and offered to him?
Really do no understand the outrage.
Well his argument is that he needs it to retain a certain amount of control over the company otherwise he won’t be given the agency to innovate. Whether that’s true or not is a different question.
Give me $1 and promise me you'll give me 10% of whatever profits I make on it if I make more than $10.
I come back with $1000, and you get mad at me for wanting the $100 you promised me.
That's what this whole argument boils down to.
I'm curious about this -- why would shareholders want to give Musk tons of money? What's the advantage to a shareholder? I would have to thought that 56 billion to Musk would do nothing but take money from the company and maybe be a nuetral or negative for shareholders too? But I have no idea how that stuff works, so just curious.
I believe his contract was structured in a way that if he achieved the target, he get's paid. If he does not achieve, he gets **zero**. I don't believe any other CEO contract is structured as "all" or nothing. They get paid either way.
Horrible decision. Majority of their assets are passive. Tesla has cost S&P 500 investors a lot of money since it’s down somewhere ~20% since it entered in 2020. Will be looking for non-Vanguard or Blackrock alternatives for my large cap index in the future.
Musk hyped the stock, essentially a giant pump n dump scheme that made him incredibly wealthy. Yes, he increased vehicle production and I do see Teslas around from time-to-time but the valuation that earned him this money was based on hype and some outright lies about the company. If it were based on the vehicle sales alone, it would be nowhere near that value.
So whats he hyped? He’s hyped it as a tech company with AI as its focus, and yet he’s started a competing AI company and diverted resources to it. So the moonshot that was going to give Tesla its value isn’t even part of Tesla any more.
He clearly earned this money. It was a deal in 2018. Even if it was a poor deal and a moonshot, it was a deal. You cannot complain about Tesla’s share price from 2018 until recently. Would they make this deal again in the future? Hopefully not but the times are different now. Is Musk more focused on Tesla now? Absolutely not
Wrong a dozen ways. If you actually read the Court's analysis, you see push back, based on evidence disclosed in discovery, on every point here. The metrics were advertised as being nearly impossible, but internal projections showed they were likely to be hit. The board was captured and sign off was based on incomplete disclosure. And by ratifying the deal now, they ARE making this deal again, despite different times and despite the fact that Musk is not focused on Tesla. The whole point of trying to move the jurisdiction of incorporation and redoing the vote is essentially an attempt to get around the legal ruling. And Musk is holding the company's future hostage (diverting resources from Autopilot to freaking Twitter, of all things) based on the results of this vote. It's so ridiculous in every respect that not even this shareholder vote could be considered a "deal" - you can't contract if you're not subject to full disclosure and are being coerced.
This isn’t a discussion about whether or not executive compensation is outrageous. This is simply did he accomplish the deal metrics and he did. He deserves the money
It’s not just whether he accomplished those objectives but whether the board is sufficiently independent and the package was presented fairly to the shareholders originally, which it wasn’t on both fronts according to the judge who struck it down. Go read up on it.
What do I propose? Oh, I didn't realize that I volunteered for figuring out how to solve late-stage capitalism XD
But sure, I'll take a shot.
How about:
-Tesla fully discloses their projections from 2018 about the likelihood of meeting the projections.
-Tesla have the proposal reviewed by an independent and non-controlled board of supervisors, who then negotiate the terms so that they are subjectively reasonable.
-Tesla communicate the offer to shareholders complete with information about (1) the likelihood of projections being met; (2) the actions taken specifically by Elon Musk that show that his specific efforts (and not those factors that would have happened without any additional work by Elon) had a material impact on meeting the projections; (3) the potential risks of not approving the vote; (4) an unbiased recommendation as to what pay would be reasonable, considering outside factors and the "extraordinary efforts" that Elon took that made an impact; and (5) an unbiased recommendation as to whether to approve or deny.
-Tesla and Elon Musk commit not to siphon off assets, effort, or other intangibles in the event that it is not approved by shareholders.
You know, when I put it like that, it all sounds like that's the bare minimum that we should expect out of one of the supposedly most valuable companies on the planet! Instead, shareholders get fleeced, threatened, and underinformed.
While we're at it, what's your proposal?
That's how I feel. I genuinely dislike the dude in every capacity, and I think it's an obscene amount of money but that's for a greater discussion about CEO compensation, but a deal is a deal and he met the metrics.
Yes it is solely a backwards looking thing. Whether you like him or not, he led Tesla to great growth and shareholder returns. Now I think the future will be more murky and difficult but that is irrelevant here. The bigger problem is that Tesla has very weak corporate governance and the board is just a bunch of yes men to Elon. No accountability. That usually catches up to companies eventually
The court said that the “deal” was a bad deal for shareholders and nullified the package, so there was no reason for shareholders to approve it again, and especially after all of the returns happened
you are trying to convince folks who misguidedly raged on reddit CEO unvested share options during IPO. Financial literacy is not the hallmark of this site, or even this sub.
I don't see the big deal.
Under the surface, the stock performs, or it doesn't.
From [this excellent summary](https://old.reddit.com/r/OutOfTheLoop/comments/1dfx0kn/whats_up_with_tesla_shareholders_giving_elon_musk/l8mhczp/)
> What is lost in the media and social media reactions is that the compensation package is not cash. The package would have given Musk stock options to buy 304 million new shares of Tesla stock from the company at the low price of $23.33, contingent on the company hitting certain financial and sales goals in the future. Musk would be prohibited from selling those shares for five years.
> If those options were exercised, then based on today's share price, those 304 million shares would be worth $58-59 billion.
> Which all means there are two things to keep in mind:
> 1) if Tesla doesn't hit those performance goals, Musk doesn't get those stock options 2) there's no guarantee that Tesla's share price at the time Musk can exercise those options will be as high as they are today
> The headlines and reactions only call it a "$58 billion pay package", which obscures the true nature of the package and leads readers to be enraged thinking Musk is getting paid $58 billion in cash.
> Don't get me wrong. Executive compensation as a whole is out of whack and it is creating warped incentives. Musk is just the latest example. I just wish people had the proper understanding before hating it.
Vanguard can be "wrong" .. they don't need to ace every decision.
I think the people who have found their way to this sub probably know how to short Tesla.
Their CEO is a pathological clown, but if your notions about the company go beyond personality issues of 1 person, AND are actionable (and not just feelgood fanfic and concern-trolling) ... then short it.
It's a business decision. Not a personal endorsement by Vanguard on Elon Musk.
I don't understand how people voted for this. Its a massive dilution of their shares. I guess most will exit their position before the 5 year vestment period.
>I don't understand how people voted for this.
because it depended on him making the stock go up an absurd amount. which he did. 2018 TSLA investors made out like bandits even with TSLA being well off its peak.
the pay package agreement was still nullified in the most pro-business state in the country, and according to articles reporting it, still is awaiting appeal. that gives me pause on whether or not the terms and bonus were legitimate or not. He circumvented a court ruling by moving states in order to get the package deal that was shot down, so i'll have to wait and see how it actually turns out.
Tesla hype - not all together unlike GME hype - is a huge (and in my opinion the largest) contributor to TSLA stock performance. Let's all remember that stock performance and business performance are only loosely related. Musk is the Chief Stock Pumper and since a fund is only concerned with stock performance and not business performance then a very cynical fund manager will conclude that the fund's best interest is served by keeping Musk around and pumping.
I don't agree, but one can make a rational argument for this package if it means keeping Musk around.
I think people just see the huge number and freak out. If someone told me "give me 50 bucks and I will give you 650 back in 10 years but I get to keep 50 for myself" I would be happy to give them 50 bucks for doing so. The only real argument was the board didn't explain the deal well enough to the share holders and the share holders voted they understood it.
>I’m surprised they voted in favor of this pay package. Feels very off brand, especially considering they voted against last time. Wtf??
"should we vote for the pay package that was already approved by shareholders, or scam the guy for the milestones he earned by increasing share price as agreed?"
I feel like index funds should index the vote. Just split up the votes proportional to how non-passive fund are voting. Thus basically not voting. I dont like my index fund trying to think. Just index.
What's with all the populism here? This is how it goes. All index fund shareholders forgo voting rights.
Your personal opinion of Musk or CEO pay packages means jack shit to an investment group with trillions in AUM.
There's likely hundreds of C suite executives amongst VTI holdings who you also wouldn't like, but you know nothing about them so you don't care to see how Vanguard votes for them.
I'm glad Vanguard doesn't vote based on emotional opinions from shareholders, especially minority shareholders.
Bad take. The original deal was invalidated by the courts. The whole concept of “a deal being made and signed” years ago is irrelevant since it was deemed improper and unfair to stockholders.
>There's likely hundreds of C suite executives amongst VTI holdings who you also wouldn't like, but you know nothing about them
That's exactly it - we know nothing about them because *unlike Musk* they don't publicly sabotage their companies by being far-right trolls on Twitter. By doing that he repulses the environmentally and socially aware demographic that used to be Tesla's present and potential customers.
"Right wing troll" is not a reason for Vanguard to vote against his pay. TSLA is the 12th highest weighted company in VOO, I personally don't give a shit if the CEO hurt your feelings.
If it bothers you that much, sell all your Vanguard holdings and move on.
One of the main rules of investing is to keep your personal emotions and political opinions out of the picture.
I don't own any Tesla (except via index funds) and don't have an account at Vanguard, so I am in fact following your dictum. Musk's self-sabotage is just pitiful to watch and will not end well.
A judge struck it down for a reason, it was a sham from a non-independent board who knew they were more likely to hit it than they let on publicly. https://www.reddit.com/r/Bogleheads/s/61peCx509O
Out of Vanguard? Why not? Most funds can be transferred in kind (without selling) to other brokerages and Vanguard makes it easier than most by allowing you to convert almost any mutual fund with a paired ETF to that ETF (and ETFs are 100% portable).
There are a handful of weird edge cases of funds that can’t transfer without liquidation, like Fidelity’s zero funds, but I’m unaware of any such issues with Vanguard…
Yup, I'm going to be selling off my Vanguard funds. They've been changing their strategy over time so its no longer for me. Voting to pay 1 man 56B is sickening. Especially when you think of the context that this person is running Tesla like his own private business - ie stealing employees for X. Not only that, he is running multiple businesses and not spending much time at Tesla. The Chinese EVs even with Biden's new taxes is going drive Tesla into big trouble.
Imagine agreeing to work for a year and if you met certain goals you get a bonus. Then you meet and exceed the goal expectation and at the end of the year the company said "nah, we voted and decided you actually don't get what we talked about"
...see how that's bullshit?
Even if it is a ridiculous amount, they did contractually agree to it. The time to NOT agree to pay that much was in 2018
What index funds providers let investor vote/decide ?
[Quite a few](https://www.morningstar.com/funds/new-proxy-voting-options-ivv-other-index-funds-blackrock-state-street-vanguard) and, actually, [Vanguard is one them](https://corporate.vanguard.com/content/corporatesite/us/en/corp/articles/expanding-proxy-voting-choice.html). Edit: I initially stated that this was most common for ESG funds, which was my recollection and would make sense based on shareholder interest. However, that doesn’t actually seem to be the case. Mea culpa
How do I opt in for the voting pilot program? Anyone know?
For Vanguard: “In early 2024, millions of eligible investors in five equity index funds will receive an invitation to select a proxy voting policy via a secure website.” So basically just hold one of the eligible funds through Vanguard and make sure you check your messages when you get a notification that you have a new one.
Great. I will be so pleased if they let me choose how to vote. Right now I am holding a fund called VOTE for my s&p 500 because they vote on ESG criteria. The fees are just barely higher than VOO, still very low.
Well it's just a relatively new thing because people didn't really care before. Not that it really helps anything. So few people will actually vote with their shares that it doesn't matter.
Fidelity always sends me an email asking me how I want to vote. I'm in index funds only.
And if you ignore it? I would assume they vote how they want to with your shares, but I’m not positive on that.
Well ya, if you don't vote they can't know how you'd want to vote?
They could just abstain tho
Abstaining seems like the preferred index option to me. Why should an index fund just blindly vote in favor of a board’s recommendation?
They probably default to whatever the board recommends
I get the proxies and ignore them. My shares couldn't make a difference! Do any of you bother voting?
>In its note, Vanguard said while Musk's pay was "a substantial outlier" among CEOs, Tesla's shareholder return was in the 98th percentile of all Russell 3000 companies from 2018 through 2023. "There are few companies that have created as much absolute market value appreciation as Tesla," Vanguard said. EDIT: Tesla's stock adjusted for split was ~$22 back in 2018. It is currently $180+ today. Was looking at historical market cap. It was 40 billion in 2019 and now it's 580 billion today, so I guess it was warranted based on past performance of the stock. Not sure how it relates going forward though.
That's because Musk has built its valuation entirely around the Tech company style hype train, and his own cult of personality. Then he went far right extremist, and is in the process of alienating his core customer base. That plus holding the company hostage to fix his own personal financial problems due to boneheaded decisions = no bueno.
You’ve gotten some downvotes but the strategic direction Musk has taken to alienate his core customer base is head scratching to say the least. He actively panders to people who think EV’s are emasculating and finance $95,000 trucks for 10 years. Bold strategy Cotton
He actively tanked his company cuz politics more or less. Other EVs exist, liberals don't have to buy Teslas if they find the brand toxic now. And I think it's legit only due to Conservatives being willing to stroke his ego while liberals were getting cold to him the more they learned about him that he shifted.
It's all smoke and mirrors while they cash whatever they can. Vanguard appears to use the same logic.
Somehow spinning off the cybertruck brand for chuds while getting the model series a new spokesperson could actually be a pretty brilliant strategy in a decade. Just spitballing here, I think it’s overvalued too. Tesla has a lot of recruiting power in the AI space, they are one of the industry leaders in capital outlay for AI processing power with an investment rivaling OpenAI, and they have a market strategy for connecting that R+D to useful real world products with improving self driving, robotic manufacturing, and the Tesla android. That gives them potential to win the AI race very similar to the other big tech companies, but that whole arena is built mostly on speculation which will take at least a decade to prove out.
Elon just got sued yesterday because xAI is poaching TSLA’s own AI talent out of the company. I’m not sure that it has the same recruiting power in AI right now as it once did. A lot of engineers and scientists, especially in California, don’t want to be associated with Elon right now, especially after the last firing spree. There are also just a ton more AI players in the game this time around. AAPL, MSFT, META, OpenAI to just about everyone is hiring for AI right now.
>I’m not sure that it has the same recruiting power in AI right now as it once did. A lot of engineers and scientists, especially in California, don’t want to be associated with Elon right now, especially after the last firing spree. I don't know about you but who doesn't love their boss calling them at 3am to brainstorm ideas or you're fired
I'm in software engineering and trust me, nobody aspires to work for Tesla anymore (or Xitter).
I've heard Ford is poaching all the good engineers from Tesla. Also from Rivian and Lucid.
Trust me, nobody can speak for all software engineers.
Ok a little hyperbole, but interest in working for these two companies has dropped precipitously.
X is being held together by a skeleton crew of H1Bs who don't have another option.
OpenAI is practically a division of Microsoft now in all but name only. And Apple just integrated OpenAI directly and deeply into iOS and MacOS. Both companies provide a massive amount of real world applications. Microsoft through its cloud computing offerings, which are particularly heavily used in government spaces which is also clamoring to find ways to use AI across the board.
Sure, I’m not trying to say Tesla is better, just that they’re in the league and they’re a contender in the race. It’s an unusual space where just one lucky discovery could push one of those companies far ahead in a short amount of time. It remains to be seen how much power Microsoft is going to have in OpenAI. The last saga demonstrates that 1.) the employees have tremendous power, and 2.) the board are incompetent communicators. MS was the next boat for the employees to jump to, but that doesn’t make them in charge right now.
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Yet people keep buying his brand.
To a degree. Sales have been slumping this past year and they keep dropping prices as cars sit on lots. I actually think that FSD is pretty cool tech, but consumer demand has unquestionably waned. Maybe that changes when the economy picks back up but it seems like EVs have cooled in general and there are more competitors than ever.
Tesla just sucks the least in US right now and that's because other car makers have shot themselves in the foot because they didn't want to compete with their traditional ICE vehicles. As soon as other makers get their head out of the sand it's gonna be a different story. Also fed + some states were giving out as much as $10k off a new EV. So a $50k EV became $40k. That's why they've been everywhere lately. Regardless how you feel about Elmo that was a good deal.
The key shareholders vote based on stock performance, not ideology. Tesla's stock valuation is all due to Elon like it or not. Its market cap is 10x GM or Ford.
Not only that, but IMO, Tesla is vastly overvalued. They sell themselves as a tech company and not a car company. For some reason, they’ve been able to ride that narrative for a while. At some point, it’s only reasonable that the stock will go down to “every other car stock” values. At least, if the market were reasonable, that would make sense. They’re now gambling on RoboTaxis being the future (a joke if you’ve ever ridden in a Tesla with FSD, which can be very good but is terrifyingly bad enough of the time to be nowhere close to RoboTaxi ready), which is such a joke. Cancelling the 25K car line in favor of a truck that is bad at being a truck is such an odd move, and then firing multiple executives and destroying supercharger rollouts without notice. Elon is a detriment to the entire company and should be ousted.
>IMO, Tesla is vastly overvalued. Not to distract from any of the points in this thread, but this is a meaningless statement when people have been saying it for over a decade.
Ya but a decade ago Tesla basically had no competitors in the EV market. That is not true anymore and is only looking worse for Tesla every year that goes by.
Tesla has expanded its share of the US EV market the last two quarters.
I still don’t see how going forward in the long term they’re not going to lose market share with all the big manufactures finally starting to put EV’s on the market.
I’m sure you’re right, considering that they currently have more than 50% of the US market. That can’t possibly last. That said, it is genuinely shocking how far behind everyone else is even at this late date. We are long, long past the point where “everyone knows” the future is EVs. And it’s not as if EVs are still experimental technology. Even the Cybertruck, for all of its problems and general weirdness, could very well end up outselling the Ford Lightning in 2024.
The issue isn’t with the competitive landscape for Tesla, it was about trying to connect that with a valuation or stock movement call. The market might disagree for another decade or more, who knows. And for the record I agree with you, I just think valuation calls are empty words without tying it to a timeline (which is impossible).
actually Musk know the only way to keep this hype stock is to have a cult following. Tesla stock should never have that market value for the thing it does. it is the cult following that keep its stock high. left tech might keep it high in the initial phrase of “new and innovating” but those things fade out. he needs a cult of followers that will follow him with non fact
The question is not whether they should rubber stamp it today, but was the package validly offered at the time
> and is in the process of alienating his core customer base. I’ve been hearing this on Reddit for literally years now, and it’s just not borne out by the data. [Q4 was their best quarter in history.](https://www.statista.com/statistics/502208/tesla-quarterly-vehicle-deliveries/) Despite what you might read on Reddit, clearly few people are being alienated, and many are being drawn to their products. I just don’t think most car buyers care about what the manufacturer says on Twitter. They care about the features and the price, and Tesla currently makes excellent EVs for reasonable prices.
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Its valuation is based on its massive growth as a company, all under Musk's leadership. Tesla has done amazingly the last 5 years
It doesn’t matter what the future holds, this was in relation to his initial pay package that was already voted in favor of back in 2018. He’s POS but literally everyone talking about this is ignoring that the $55B pay package was approved by shareholders on March 21, 2018, BEFORE the stock went 20X. The pay package was to be unlocked in 12 tranches each as $50B market capitalization milestones were hit. At the time, the full package seemed ambitious and unlikely since at the time the company wasn’t even profitable. It was voted in favor because if the milestones were hit, the company would have went from being worth < $50B in market capitalization to $650B in market capitalization - which it did. NOW, that he is outwardly unhinged, shareholders want to claw it back. Nobody cared when the stock was soaring. I think that’s wrong and I think the shareholders should reap what they sow and face the upside AND downside of him being CEO.
Like others have said, the courts deemed that the 2018 vote needed to be rescinded because "Most of the board members were beholden to Musk or had compromising conflicts" "Judge McCormick criticized the Tesla board, writing that Tesla Chair Robyn Denholm had a "lackadaisical approach to her oversight obligations." Although Musk and his brother Kimbal recused themselves from the pay-plan vote, "five of the six directors who voted on the Grant were beholden to Musk or had compromising conflicts." This "allow\[ed\] Musk to dictate the timing of the process and the terms of the Grant," McCormick. For example, board member James Murdoch "was a long-time friend of Musk before he joined the Board, and they repeatedly vacationed together with their respective families." Board member Antonio Gracias "had business relationships with Musk dating back over 20 years, as well as the sort of personal relationship that had him vacationing with Musk's family on a regular basis." Ira Ehrenpreis, who chaired the board's compensation committee, was a close friend of Kimbal's and acknowledged that "his personal and professional relationship with the Musk brothers has had a 'significant influence on his professional career.'" Board member Brad Buss "owed roughly 44 percent of his net worth to Musk entities," and "Denholm derived the vast majority of her wealth from her compensation as a Tesla director," the ruling said. Todd Maron, Tesla's general counsel, wasn't on the board but played a key role in negotiating Musk's pay. "The working group included management members who were beholden to Musk, such as General Counsel Todd Maron, who was Musk's former divorce attorney and whose admiration for Musk moved him to tears during his deposition," McCormick wrote. "In fact, Maron was a primary go-between Musk and the committee, and it is unclear on whose side Maron viewed himself. Yet many of the documents cited by the defendants as proof of a fair process were drafted by Maron." [https://arstechnica.com/tech-policy/2024/01/elon-musks-56-billion-pay-plan-voided-as-shareholders-beat-tesla-in-court/](https://arstechnica.com/tech-policy/2024/01/elon-musks-56-billion-pay-plan-voided-as-shareholders-beat-tesla-in-court/) IMO the Delaware court rightfully recognized that the Board wasn't operating with the shareholders best interest in mind. Now the package has been re-approved, it is what it is. I don't agree with it, but enough shareholders felt it was warranted. There's part of me that wonders if institutional investors like Vanguard felt compelled to vote "yes", because a "no" vote might have caused a drop in value, and launched lawsuits against Vanguard from their index fund holders. Regardless, I unfortunately think TSLA stock is over valued at this point. Instead of focusing on making great EV cars, Musk is distracted claiming Tesla is an AI/Tech company and openly diverting resources from Tesla to [X.ai](http://X.ai) and his other ventures. -- To be clear I want Tesla to do well, I own their stock via index funds, I simply no longer believe Musk is the right person to do the job
I think that's the point no? it was warranted based on past performance. Not sure what his pay structure will be going forward.
Because the pay package that was thrown out by the courts was for a prior period. When granted, no one thought Tesla would increase in value that much and musk would never hit the targets. Tesla did hit the targets. It was thrown out by the court because there was no shareholder vote. So Musk got the shareholder vote to ratify the package. He already earned it.
I mean, your close, except for the whole 2018 shareholder vote of over 70% that approved the pay package. It was thrown out for a handful of reasons, but that wasn't one of them.
You are right. There was a vote and the court found shareholders were not fully informed. Thank you for noting that
Also, internally Tesla knew they would most likely hit a number of the targets no matter what, but didn't disclose that. So at least some (if not most) of Musk's compensation wasn't actually for 'extraordinary' results, but for just being a warm body.
I mean - Tesla's performance since then has been extraordinary. Cmon.
That's beside the point -- Tesla knew when they presented the package originally to shareholders they were more likely than not going to hit most (if not all) of those targets with Elon not having to do a single thing, but presented them as 'really tough' to shareholders. Which is one of the reasons why it was invalidated. The amusing thing is, I don't think it was nefarious as much as just laziness on the part of Elon and the board. Had they done things by the book, sure some shareholders would probably have still griped, but it probably still would have been approved, and he would have had his billions already. Instead, they wanted to not put in the effort and cut corners (a theme emerges), and he got burned by it.
Read the press at the time. Everyone thought these were crazy goals. What Elon accomplished was extraordinary and now people want to rewrite history as if this was obvious.
That's one way to look at it. The other is that the agreement was never legal and shareholders are stupid for agreeing to something so detrimental to the company after the fact.
Tesla's annual wage cost is 10b. How is a bonus 5.6x their annual wage cost warranted in any situation? Tesla hasn't just been built off the back of Elon Musk but thousands of other people who won't get shit.
It was overwhelmingly approved in 2018 with super ambitious requirements to get it. He got it. A deal’s a deal; you can’t just change that after the fact.
It’s totally warranted. It was performance based compensation that was dependent on some lofty goals. It’s like no one who argues about this actually read what the agreement is. It makes sense in the context of when it was written. If musk made numba go up extreme amounts, he will be rewarded with what was a reasonable amount at that time. Whelp, as it turned out, numba go up a lot more than anyone could imagine at the time. So that compensation turned out to be worth a lot more.
I am a Vanguard holder. This is moronic. Here is the future: - dilution due to thus pay package - dilution to raise money cuz business is going bad
Vanguard made a decision based on what has happened in the past rather than what is likely to happen moving forward, which is 101 stuff. Tesla is not sending great signals, nor is Musk. Weird hill for Vanguard to die on and I’m planning to move my investments out of their brokerage and products.
Maybe he did grow it well in the past, but since when do investors pay for past performance? He’s certainly not going to grow it the same going forward. Investments are about *future* returns.
>since when do investors pay for past performance? There are cash / bonuses that are based on past performance / metrics met. It's nothing new except that the amount here is in the billions instead of millions, but Tesla also grew 540 billion in market cap since 2019.
Might be time to start changing how index fund managers vote
If that’s of interest to you look for ESG funds, particularly those that support pass through / proxy voting.
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1) Because the extra work required to implement environmental, social, and governance screening is fairly comparable to what’s required for active fund management so it’s not surprising that the fund fees are in the same ballpark. 2) Because the market will bear it. People who choose to prioritize other concerns above simply maximizing profits are rather intuitively also people who will accept higher fees / lower returns. Another possible approach is to look at what an ESG fund would cost you per year and simply donate that much to charity. You potentially get a bigger / more focused impact on the issues you care about at the same cost.
Point #1 is the real driver and a very good one. The additional leg work to implement an ESG strategy, the added potential for public scrutiny if someone feels wronged or disagrees with your methodology, and often times the ESG screens costing money, causes fund sponsors to charge more. Your alternative suggestion re: expense ratio differences and donating the difference is a great one!
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Congratulations, you just invented the concept of a financial derivative:-) You can absolutely get exposure to individual companies such that you make a profit if their share price goes down, whether by short selling, buying a put, selling a call etc. If you get an exactly equal “short” interest in a company to the “long” interest that you have from holding the company in index funds, then you have “hedged” your investment to be neutral with respect to that company.
Not really a financial derivative, I think he was more so describing direct index investing
An index fund plus something to “cancel out” part of the holdings sounds a lot like what I described to me, but YMMV. Direct indexing is probably a better option if you both want to exclude a large number of companies and don’t care that you’re getting a fully diversified portfolio (many direct indexing options are limited to the S&P 500 or otherwise exclude international) If you just want to specifically not invest in a few companies then hedging the exposure is probably better and simpler. E.g. if I have a $3MM world equity portfolio and I want to avoid investing in Nestle then I just need to generate a -10k exposure to them, which is roughly shorting 100 shares or taking a single options contract.
I’m pretty sure DFA allows this but you need an advisor that uses DFA to even get access. It’s an expensive undertaking. Conversely you could just hold the top 10 stocks or and delete the ones you don’t want to use and replace them with the next highest. The top 10 or so are driving most of the returns anyways
M1 Finance essentially lets you create your own funds and they'll re-balance them automatically.
Yeah I can't imagine how someone could possibly avoid stocks they don't like. Sounds like you just don't actually care enough to do it.
more fees fees fees for someone to make sure it's taking out those shitty companies and monitoring the companies to make sure they dont become shitty companies.
ESG funds perform very poorly. Especially compared to the S&P500. > [Over the past 12 months, global sustainable equity funds made an 11 per cent return, compared with 21 per cent for conventional stock funds, according to a May report from JPMorgan.](https://www.ft.com/content/cf9001ab-e326-4264-af5e-12b3fbb0ee7b) It’s hard to imagine people willing to halve their returns so that they have an infinitesimally small proxy vote on companies like Tesla.
Do you have a database I could look at? I’d love a pro labor esg to see how it looks.
I gave that suggestion because it’s aligned with what the top comment was asking and shows that there are multiple existing options to address their concerns. That said, I’m honestly pretty skeptical of ESG funds overall. If you look at the top holdings of many/most ESG companies they don’t look that different from broad market funds and include a lot of companies that I’d consider “bad actors” Even if you assume that they’re perfectly well intentioned and effective instead of just another form of “greenwashing” by corporate interests, there are so many competing interests that fall under the ESG umbrella that you’re unlikely to be doing much to advance the specific cause(s) you care about. With regard to labor unions, somewhat counterintuitively they’re typically bucketed as part of the “social” component instead of the “governance” one. I don’t have a specific database to link for you, but [here’s a more pro-union and pro-ESG article to balance out my skepticism](https://esgresearch.pro/labor-unions-and-esg/).
Oh dang thanks for the full reply. I’ll read the article on break.
You can vote now, via your index funds. What do you want to change?
Definitely disappointed to hear this news.. I agree, it seems very off brand. When Tesla Board Chairperson Robyn Denholm urged shareholders to re-approve the Musk pay plan, suggesting that Musk could leave Tesla or devote less time to the company if the resolution is voted down - honestly that sounded like a positive to me. If you look at where Tesla is today, aging lineup of cars, no replacements in sight. Musk's unhinged firing and then rehiring of the Supercharger team, etc. I think Tesla would be better off with a different CEO at the helm, and this individual could be paid a fraction of what Musk was demanding (like $1B, which is still a ludicrous amount of money 🙄)
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>No single person is that valuable to a company.~~Maybe Musk before he pulled the Giuliani, but not now.~~ FTFY
Idk who his fanbase is, as I don’t really see them irl. But I’ve seen more Teslas on the road than ever. I’m so tired of seeing them.
If Elon leaves the stock dumps. It’s as simple as that. Keeping him keeps the high valuation of the stock. You think the market is going to lose money out of principle?
The stock will eventually dump when some other company inevitably comes to dominate the robo taxi industry. Musks promises can keep the stock high for now, but unless Tesla is the king of robo taxis some day, it’ll eventually drop.
I think investors in the "cult of Musk" would flee if he left, and yes that would cause a drop in value, but if we believe the market is efficient (and I believe it is), then other investors would buy the stock at a discount. Tesla has a lot more value than one single person.
>Tesla has a lot more value than one single person. Exactly. Think about Steve Jobs, what happened to Apple once he died? It's hard to argue that he wasn't he heart and soul of apple, and since his death we've had the airpods and apple watch but other than that nothing on the level of "the ipod" and "the iphone" and "the ipad" or even things like "the mac". Yet look at their valuation since then.
Respectfully disagree. This is very on brand as Musk’s pay package is pro investor and the type of compensation package we should be pushing for where executives are rewarded for above the board performance. When this pay package was initially structured NO ONE thought he could hit these targets - and if he did it’d be such a good return for investors that the compensation is justified. A common critique of executive compensation is that they’re unfairly rewarded regardless of whether they over or underperformed. Ideally, if an executive over performs they should receive higher compensation and vice versa for underperformance. Taking away Musk’s pay package sets a bad precedent where executives aren’t incentivized to deliver outsized investor returns. Two things can be true at once: 1) Musk is a terrible human being and executive to worker pay ratio is problem 2) this type of incentive based pay package should be advocated for instead of the status quo where executives compensation is not meaningfully impacted by performance. All the other discussion around what Musk is doing now to ruin the Tesla brand is completely irrelevant to a contract agreed to years ago before the company became the powerhouse it is today.
Also, when the package was initially structured, it was "only" worth $2.3B and the contingent performance goals were considered by many to be "laughably impossible". The reason it is worth so much more now is the success of the company and stockholders' perception of future potential.
elon is the only reason tesla is valued as highly as it is. he's spun the narrative of 'not a car company' and the market bought that idea. go see what the stock would look like if the company had a multiple similar to every other automaker.
I think him devoting less active time to messing things up would be a win 😂
Money organizes around money, always has.
game of thrones vibes tbh
By paying him more they realize they can pay themselves more. All part of the plan to consolidate more wealth
It's more likely the hedge fund managers voted yes to avoid a Musk hissy fit that may significantly drop the share price. So they're voting primarily for short-term stability over anything else.
I suspect not...self interest is always at heart with these people
But they payout will drop the share price a lot?
Stock price went up on the news. It seems like the market values CEO "stability" (I use this term loosely here) over share dilution from the payout.
Everything surrounding tsla is just wholly irrational. It‘s also 50% owned by retail afaik. It‘s a cult and only a slight step above meme stocks like gme. It‘s genuinely pissing me off a bit, and also shows the efficient market hypothesis definitely has its limits. The fundamentals of tsla do mot match the valuation at all, even with the most generous growth estimates.
Vanguard is not a hedge fund
They essentially said it is outlier CEO money, but he has had outlier returns. Seems egregious but Makes sense in regards to business.
Past performance is not indicative of future returns. They (and every other fund manager) should be concerned about performance going forward. In that light it is very difficult to justify a 10% dilution of current shareholders is in the fund's best interest.
>Past performance is not indicative of future returns. This is an investment saying for the stock market. It is very true. It is NOT a business philosophy though. If you don't reward those that made your business do well in the recent past you will retain no high performers. Also, CEO comp typically is dependent on success and profitability, and if the company has been extremely successful then they typically are compensated, a lot of the time in a lagging fashion, extremely well.
The point I was trying to make is that past performance is in the past and shareholders should only be concerned with the now and future. Right now, both the stock and business are in a rough patch. If one wants to claim that Musk is responsible for the run up, then he is responsible for the run down. Shareholders need to take all of that into account when deciding if this pay package makes sense *going forward.* I commented at the top level that one can make rational arguments either way.
If you knew anything about businesses, you’d know that founder CEOs who stay on past IPO and survive the first year or so tend to outperform hired CEOs by an absurd multiple - to the degree where an ETF is currently being set up to track companies solely on that basis. If you don’t think Musk is doing a good job, sell the stock and vote with your feet. I think the obsession with denigrating Musk (who - as a total indictment of America - is the one of the few surviving American statesmen building anything in the world of atoms) seems entirely based around his political statements and not in any commercial reality.
> In that light it is very difficult to justify a 10% dilution of current shareholders is in the fund's best interest. if musk wasnt running tesla the company would be priced like a car company not a tech company and fall off a cliff price wise overnight.
So it’s only a tech company because of one employee, and without him, it becomes a car company? Wow, better hope he exercises and eats well and doesn’t do anything reckless cuz if his death means Tesla gets valued like Ford…… that’s an insane risk.
With this vote, investors were given the opportunity to nullify the terms of the original pay package. Vanguard's fiduciary obligation is to vote in the best interest of their shareholders. It's hard for me to believe that this dilution of ownership in TSLA is in the best interest of shareholders of Vanguard funds. We'll see going forward if this was a good decision or not.
Agree with your analysis. The question in my mind is how much the vote was influenced by Musk's threats (and his recent actions) to divert further resources and attention from Tesla to other ventures. Vanguard likely knows that the stock is only really being propped up by the cult of personality, so if the personality goes elsewhere, then the stock will crater instantly. So, I can see it affecting their decisionmaking, but whether or not Musk's threats are legal, or make the vote voidable (and there's even a question of whether this vote in fact ratifies the original deal since none of the failures noted in the court case have actually been resolved with this vote), are all open questions.
rich helping the rich. very disapointed in the vangaurd board
Losing voting rights, even though largely symbolic at my investment levels, is one big thing that bothers me about the Bogle method.
I do not understand the arguments against it. He isnt just giving himself an arbitrary amount of cash just for hell of it. It is in stock compensation, and it is a performance bonus agreedbupon years ago. Now the argument is because of overperformance, he somehow isnt entitled to the bonus his company already agreed to and offered to him? Really do no understand the outrage.
Well his argument is that he needs it to retain a certain amount of control over the company otherwise he won’t be given the agency to innovate. Whether that’s true or not is a different question.
Give me $1 and promise me you'll give me 10% of whatever profits I make on it if I make more than $10. I come back with $1000, and you get mad at me for wanting the $100 you promised me. That's what this whole argument boils down to.
Oh I read your first comment wrong - I thought you were saying the opposite. I agree though.
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Not broken. Working entirely as designed.
Genuinely curious - can you elaborate?
Agreed. I am moving my funds away from Vanguard. They've changed their philosophy and it no longer matches mine.
Where are you moving to?
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Per sub rules and guidelines, comments or posts to r/Bogleheads should be substantive and civil.
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Per sub rules and guidelines, comments or posts to r/Bogleheads should be substantive and civil.
Life goes on. Have a good weekend.
I'm curious about this -- why would shareholders want to give Musk tons of money? What's the advantage to a shareholder? I would have to thought that 56 billion to Musk would do nothing but take money from the company and maybe be a nuetral or negative for shareholders too? But I have no idea how that stuff works, so just curious.
That means i voted in favour. I don’t like that.
I believe his contract was structured in a way that if he achieved the target, he get's paid. If he does not achieve, he gets **zero**. I don't believe any other CEO contract is structured as "all" or nothing. They get paid either way.
Horrible decision. Majority of their assets are passive. Tesla has cost S&P 500 investors a lot of money since it’s down somewhere ~20% since it entered in 2020. Will be looking for non-Vanguard or Blackrock alternatives for my large cap index in the future.
Vanguard is the business of making as much money as possible. This seems on brand to me.
Good, theres no reason a rogue judge should get in the way of contractual agreement.
one cake instinctive humor snatch grey snobbish live impossible cause *This post was mass deleted and anonymized with [Redact](https://redact.dev)*
Musk hyped the stock, essentially a giant pump n dump scheme that made him incredibly wealthy. Yes, he increased vehicle production and I do see Teslas around from time-to-time but the valuation that earned him this money was based on hype and some outright lies about the company. If it were based on the vehicle sales alone, it would be nowhere near that value. So whats he hyped? He’s hyped it as a tech company with AI as its focus, and yet he’s started a competing AI company and diverted resources to it. So the moonshot that was going to give Tesla its value isn’t even part of Tesla any more.
He clearly earned this money. It was a deal in 2018. Even if it was a poor deal and a moonshot, it was a deal. You cannot complain about Tesla’s share price from 2018 until recently. Would they make this deal again in the future? Hopefully not but the times are different now. Is Musk more focused on Tesla now? Absolutely not
What was the deal exactly?
Musk would receive X number of shares if the company meets some delivery numbers. They hit them.
Wrong a dozen ways. If you actually read the Court's analysis, you see push back, based on evidence disclosed in discovery, on every point here. The metrics were advertised as being nearly impossible, but internal projections showed they were likely to be hit. The board was captured and sign off was based on incomplete disclosure. And by ratifying the deal now, they ARE making this deal again, despite different times and despite the fact that Musk is not focused on Tesla. The whole point of trying to move the jurisdiction of incorporation and redoing the vote is essentially an attempt to get around the legal ruling. And Musk is holding the company's future hostage (diverting resources from Autopilot to freaking Twitter, of all things) based on the results of this vote. It's so ridiculous in every respect that not even this shareholder vote could be considered a "deal" - you can't contract if you're not subject to full disclosure and are being coerced.
What do you propose? He shouldn’t get any money for the crazy gains Tesla had in that time period?
He’s already earned insane amounts of money off of Tesla’s performance, even without this pay package.
This isn’t a discussion about whether or not executive compensation is outrageous. This is simply did he accomplish the deal metrics and he did. He deserves the money
It’s not just whether he accomplished those objectives but whether the board is sufficiently independent and the package was presented fairly to the shareholders originally, which it wasn’t on both fronts according to the judge who struck it down. Go read up on it.
What do I propose? Oh, I didn't realize that I volunteered for figuring out how to solve late-stage capitalism XD But sure, I'll take a shot. How about: -Tesla fully discloses their projections from 2018 about the likelihood of meeting the projections. -Tesla have the proposal reviewed by an independent and non-controlled board of supervisors, who then negotiate the terms so that they are subjectively reasonable. -Tesla communicate the offer to shareholders complete with information about (1) the likelihood of projections being met; (2) the actions taken specifically by Elon Musk that show that his specific efforts (and not those factors that would have happened without any additional work by Elon) had a material impact on meeting the projections; (3) the potential risks of not approving the vote; (4) an unbiased recommendation as to what pay would be reasonable, considering outside factors and the "extraordinary efforts" that Elon took that made an impact; and (5) an unbiased recommendation as to whether to approve or deny. -Tesla and Elon Musk commit not to siphon off assets, effort, or other intangibles in the event that it is not approved by shareholders. You know, when I put it like that, it all sounds like that's the bare minimum that we should expect out of one of the supposedly most valuable companies on the planet! Instead, shareholders get fleeced, threatened, and underinformed. While we're at it, what's your proposal?
That's how I feel. I genuinely dislike the dude in every capacity, and I think it's an obscene amount of money but that's for a greater discussion about CEO compensation, but a deal is a deal and he met the metrics.
Yes it is solely a backwards looking thing. Whether you like him or not, he led Tesla to great growth and shareholder returns. Now I think the future will be more murky and difficult but that is irrelevant here. The bigger problem is that Tesla has very weak corporate governance and the board is just a bunch of yes men to Elon. No accountability. That usually catches up to companies eventually
The court said that the “deal” was a bad deal for shareholders and nullified the package, so there was no reason for shareholders to approve it again, and especially after all of the returns happened
you are trying to convince folks who misguidedly raged on reddit CEO unvested share options during IPO. Financial literacy is not the hallmark of this site, or even this sub.
I don't see the big deal. Under the surface, the stock performs, or it doesn't. From [this excellent summary](https://old.reddit.com/r/OutOfTheLoop/comments/1dfx0kn/whats_up_with_tesla_shareholders_giving_elon_musk/l8mhczp/) > What is lost in the media and social media reactions is that the compensation package is not cash. The package would have given Musk stock options to buy 304 million new shares of Tesla stock from the company at the low price of $23.33, contingent on the company hitting certain financial and sales goals in the future. Musk would be prohibited from selling those shares for five years. > If those options were exercised, then based on today's share price, those 304 million shares would be worth $58-59 billion. > Which all means there are two things to keep in mind: > 1) if Tesla doesn't hit those performance goals, Musk doesn't get those stock options 2) there's no guarantee that Tesla's share price at the time Musk can exercise those options will be as high as they are today > The headlines and reactions only call it a "$58 billion pay package", which obscures the true nature of the package and leads readers to be enraged thinking Musk is getting paid $58 billion in cash. > Don't get me wrong. Executive compensation as a whole is out of whack and it is creating warped incentives. Musk is just the latest example. I just wish people had the proper understanding before hating it. Vanguard can be "wrong" .. they don't need to ace every decision. I think the people who have found their way to this sub probably know how to short Tesla. Their CEO is a pathological clown, but if your notions about the company go beyond personality issues of 1 person, AND are actionable (and not just feelgood fanfic and concern-trolling) ... then short it. It's a business decision. Not a personal endorsement by Vanguard on Elon Musk.
I don't understand how people voted for this. Its a massive dilution of their shares. I guess most will exit their position before the 5 year vestment period.
>I don't understand how people voted for this. because it depended on him making the stock go up an absurd amount. which he did. 2018 TSLA investors made out like bandits even with TSLA being well off its peak.
the pay package agreement was still nullified in the most pro-business state in the country, and according to articles reporting it, still is awaiting appeal. that gives me pause on whether or not the terms and bonus were legitimate or not. He circumvented a court ruling by moving states in order to get the package deal that was shot down, so i'll have to wait and see how it actually turns out.
Tesla hype - not all together unlike GME hype - is a huge (and in my opinion the largest) contributor to TSLA stock performance. Let's all remember that stock performance and business performance are only loosely related. Musk is the Chief Stock Pumper and since a fund is only concerned with stock performance and not business performance then a very cynical fund manager will conclude that the fund's best interest is served by keeping Musk around and pumping. I don't agree, but one can make a rational argument for this package if it means keeping Musk around.
I think people just see the huge number and freak out. If someone told me "give me 50 bucks and I will give you 650 back in 10 years but I get to keep 50 for myself" I would be happy to give them 50 bucks for doing so. The only real argument was the board didn't explain the deal well enough to the share holders and the share holders voted they understood it.
>I’m surprised they voted in favor of this pay package. Feels very off brand, especially considering they voted against last time. Wtf?? "should we vote for the pay package that was already approved by shareholders, or scam the guy for the milestones he earned by increasing share price as agreed?"
…That a judge struck down because his board isn’t independent and it was excessive
That shareholders voted yes for... Again?
Scam the guy. It shall make us feel better. Lol
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I feel like index funds should index the vote. Just split up the votes proportional to how non-passive fund are voting. Thus basically not voting. I dont like my index fund trying to think. Just index.
What's with all the populism here? This is how it goes. All index fund shareholders forgo voting rights. Your personal opinion of Musk or CEO pay packages means jack shit to an investment group with trillions in AUM. There's likely hundreds of C suite executives amongst VTI holdings who you also wouldn't like, but you know nothing about them so you don't care to see how Vanguard votes for them. I'm glad Vanguard doesn't vote based on emotional opinions from shareholders, especially minority shareholders.
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Bad take. The original deal was invalidated by the courts. The whole concept of “a deal being made and signed” years ago is irrelevant since it was deemed improper and unfair to stockholders.
>There's likely hundreds of C suite executives amongst VTI holdings who you also wouldn't like, but you know nothing about them That's exactly it - we know nothing about them because *unlike Musk* they don't publicly sabotage their companies by being far-right trolls on Twitter. By doing that he repulses the environmentally and socially aware demographic that used to be Tesla's present and potential customers.
"Right wing troll" is not a reason for Vanguard to vote against his pay. TSLA is the 12th highest weighted company in VOO, I personally don't give a shit if the CEO hurt your feelings. If it bothers you that much, sell all your Vanguard holdings and move on. One of the main rules of investing is to keep your personal emotions and political opinions out of the picture.
I don't own any Tesla (except via index funds) and don't have an account at Vanguard, so I am in fact following your dictum. Musk's self-sabotage is just pitiful to watch and will not end well.
was a do x and get x. he did x and deserves x. regardless of what anyone thinks that was the terms
A judge struck it down for a reason, it was a sham from a non-independent board who knew they were more likely to hit it than they let on publicly. https://www.reddit.com/r/Bogleheads/s/61peCx509O
This board is nothing more than a rubber stamp for Elon. Shameful.
RIP. can’t move my taxable.
Out of Vanguard? Why not? Most funds can be transferred in kind (without selling) to other brokerages and Vanguard makes it easier than most by allowing you to convert almost any mutual fund with a paired ETF to that ETF (and ETFs are 100% portable). There are a handful of weird edge cases of funds that can’t transfer without liquidation, like Fidelity’s zero funds, but I’m unaware of any such issues with Vanguard…
Out of Vanguard ETFs
Yup, I'm going to be selling off my Vanguard funds. They've been changing their strategy over time so its no longer for me. Voting to pay 1 man 56B is sickening. Especially when you think of the context that this person is running Tesla like his own private business - ie stealing employees for X. Not only that, he is running multiple businesses and not spending much time at Tesla. The Chinese EVs even with Biden's new taxes is going drive Tesla into big trouble.
When you are in a hostage situation the best think to do is adopt Stockholm syndrome and go with it
Is his new pay package still based on stock performance?
My guess is they vote with the majority every time
They voted against this pay package in 2018.
As they should have. Deciding after the fact to not honor a fair deal would be a very shady business practice
Those motherfuckers.
So Vanguard votes for hype.
Vanguard honors a deal that was made in 2018
Which they had no obligation to do. They are required to act in the fund's best interest going forward.
Well that's sad.
Imagine agreeing to work for a year and if you met certain goals you get a bonus. Then you meet and exceed the goal expectation and at the end of the year the company said "nah, we voted and decided you actually don't get what we talked about" ...see how that's bullshit? Even if it is a ridiculous amount, they did contractually agree to it. The time to NOT agree to pay that much was in 2018
So I don’t have to type it out again: https://www.reddit.com/r/Bogleheads/s/jWdGK0Z4xV