Farient Briefings: Judge Rules Musk Comp Plan Unfair

February 19, 2024

Into the Void: Judge Rules Musk Comp Plan Unfair

The reversal by a Delaware court of Elon Musk’s 2018 compensation was almost as stunning as its sums and performance measures, which Musk hit or exceeded. The unprecedented $55.6 billion equity package was challenged by a single investor who reportedly owned nine shares of Tesla stock. Under the “entire fairness doctrine,” the burden to prove that the pay plan was fair for the Tesla CEO fell to the defendant—Musk and six named directors. Learn more about Musk’s comp plan:

Why Did Tim Cook’s Pay Package Hold Up in Court While Elon Musk’s Failed—Fortune

Size and scale mattered, said Farient Partner Marc Hodak in this Fortune article. “[$55 billion] is automatically going to attract an unusual amount of scrutiny.”

Read more

 

ICYMI

JPMorgan Chase & Co. and State Street quit climate group as BlackRock scales back—Financial Times

The Financial Times reported that some of the world’s largest asset managers are ending or scaling back their participation in Climate Action 100+ (CA+). The investor-led coalition “seeks to pressure the largest emitters of greenhouse gases (GhG) to take necessary action on climate change,” according to its website. In June, CA+ said it would change its strategic focus to pressure big oil and gas companies to explain how they are actively reducing their GhG emissions. JPMorgan Chase & Co. and State Street Global Advisors confirmed to the FT their decisions to drop out of the initiative, reportedly saying that the second phase went too far. BlackRock said it would transfer its participation to a smaller international arm. ESG initiatives, especially in the United States, are being challenged by “anti-woke” forces. The blowback is causing some companies to take a more discreet approach to their ESG efforts while remaining committed to value-creating sustainability aims.

 

 

News From Guerdon Associates, Our Aussie GECN Group Partner

The annual analysis of CEO remuneration in the ASX 300 sees smaller increases while shareholders realize higher returns. Guerdon Associates, a GECN company, reports a 3.1% increase in fixed pay, lagging increases for the general workforce. Also analyzed are changes in fixed pay, incentives, and total remuneration levels by company size and sector.

 

Where to Find Us

National Association of Corporate Directors (NACD)

Fortune 500 Compensation Committee Chair Advisory Council

Washington, DC

March 13-14

For more information, please contact us at info@farient.com.

 

Watch For It

How entrenched is the anti-ESG movement in the various regions of the world? That question is explored in the soon-to-be-released report, 2024 Global Trends in Stakeholder Incentives: What’s Next?, produced by Farient Advisors in conjunction with the Global Governance and Executive Compensation (GECN) Group.

Also included in the upcoming 2024 report:

  • Prevalence of stakeholder measures globally and by sector
  • Types of stakeholder measures
  • Types of social vs. environmental measures
  • Company examples
  • Exclusive Insights from board directors and investors

About Farient Advisors 

Farient Advisors LLC is an independent premier executive compensation, performance, and corporate governance consultancy. Farient provides a full array of services, linking business strategy to compensation through a tailored, analytically rigorous, and collaborative approach. Farient has locations in Los Angeles, New York, and Louisville and works with clients globally through its partnership in the Global Governance and Executive Compensation (GECN) Group. Farient is a certified diverse company and is recognized by the Women’s Business Enterprise National Council.

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