Opinion: Cathie Wood Calls Delaware Court Decision on Elon Musk’s Compensation Plan ‘Un-American’
Last week, the Delaware Chancery Court made a controversial decision to nullify Elon Musk’s $56 billion compensation plan from 2018. This decision has sparked intense debate among social-media users and analysts, with opinions ranging from support for the court’s decision to criticism of its implications for investor rights. One prominent voice in this discussion is Tesla bull Cathie Wood, founder and CEO of Ark Invest.
In a recent post on X, formerly Twitter, Wood expressed her strong disagreement with the court’s ruling. She called it “un-American,” arguing that it is an assault on investor rights and an insult to the Board of Directors of one of the most successful companies in US history. Wood’s statement reflects her belief that the Delaware court has overlooked the achievements of Tesla and its CEO.
Wood emphasized her professional relationship with Tesla Chairman Robyn Denholm, whom she has known for over 17 years. She described Denholm as a person of unquestionable integrity, with a no-nonsense and objective approach to her work. Wood’s support for Denholm further underscores her belief in the integrity of Tesla’s board and the fairness of Musk’s compensation plan.
Delving into the details of the 2018 pay award, Wood highlighted the ambitious goals set by Tesla’s board for Musk. She argued that these targets were seen as nearly impossible to achieve by most analysts and auto manufacturers at the time. Wood’s research shows that while the target was challenging, it could be accomplished with exceptional execution. She expressed her excitement in 2018 when Tesla and Musk aimed for Ark’s bull-case price target of $4,000 by 2023, a significant increase from the then-trading price of $21.
Wood also pointed out that Ark, on behalf of its clients, voted in favor of Musk’s compensation plan, along with approximately 80% of Tesla shareholders. She believes that the court’s decision undermines the voices of these shareholders who had ample opportunity for debate and discussion on the plan’s feasibility.
Furthermore, Wood highlighted Musk’s decision to forgo a salary for five years. She argued that if Musk had not achieved the lofty goals set by the board, he would have received much less compensation. Instead, Musk’s determination and ingenuity led to Tesla hitting Ark’s bull-case target price earlier than anticipated, benefiting shareholders and changing their lives for the better.
Wood’s support for Musk and her critique of the court’s decision stem from her belief that Tesla’s story epitomizes the American dream. She sees the court’s ruling as an embarrassment to the ideals that people have flocked to America for. Wood’s statement reflects her admiration for Tesla and its contribution to the lives of its shareholders.
Musk himself has expressed his dissatisfaction with the court ruling, lamenting the challenges of running Tesla as a public company. However, analysts see this as an opportunity for the board to formulate a new pay plan for Musk, potentially addressing some of the governance concerns surrounding his compensation.
While the debate over Musk’s compensation plan continues, it is important to note that Tesla is facing fundamental challenges, including a slowdown in demand and eroded margins due to increased competition. These challenges have negatively impacted Tesla’s financial performance and stock price.
Tesla’s stock closed at $187.91 on Friday, reflecting the company’s struggles in the market. As the company navigates these obstacles, the outcome of the debate over Musk’s compensation plan will undoubtedly play a significant role in shaping Tesla’s future.
In conclusion, Cathie Wood’s support for Elon Musk and her criticism of the court’s decision highlight the ongoing debate surrounding Musk’s compensation plan. While opinions on this matter vary, it is clear that the outcome will have significant implications for Tesla and its shareholders. As the discussion continues, it remains to be seen how this controversy will impact Tesla’s trajectory in the coming years.
