A brief background of the important news
On April 17, Tesla filed its annual proxy statement with the SEC. Tesla will hold an annual shareholder meeting on June 13, at which shareholders will vote on 12 proposals, the statement said.
This includes moving Tesla's domicile from Delaware to Texas. and re-voted to approve the 100% performance-based stock option award granted to Elon Musk in 2018, as approved by shareholder vote.
In January, a Delaware judge ruled that the CEO performance-based compensation package that Musk was awarded in 2018 was invalid. At the time of judgment, the compensation package was valued at $56 billion and is currently worth about $48 billion.
In January 2018, Tesla announced a compensation package for CEO Elon Musk, when Tesla's market capitalization was only about $59 billion. Tesla's market capitalization reached $1 trillion in 2021. At the end of 2023, the market capitalization is about $780 billion. Musk has already completed the agreed performance targets.
So, is it reasonable for Tesla to be ready to re-vote to approve Musk's huge compensation package despite the Delaware judge's ruling?
The following is Wang Yuquan's important news commentary:
On April 17, Tesla Inc. filed a statement with the SEC, saying that they would hold a shareholder meeting in June to discuss some important matters. Two of them caught our attention, and both of them said the same thing.
The first is that Tesla's corporate headquarters will be moved from Delaware to Texas, why should it be moved? It is because of a previous public case, Musk could have received a sky-high salary. And this is a bet, that is, you have to achieve a certain performance, I can pay you.
But as a result, a minority shareholder in the United States, who is said to hold only a few shares of Tesla stock, filed a lawsuit in Delaware, and the Delaware justice denied the compensation.
How much did Musk lose? It was worth about $56 billion at the time, and now it's worth $48 billion because of a slight drop in the stock price. A small shareholder who holds a few shares of the stock has lost $50 billion in a lawsuit, which is really ridiculous.
So Musk decided to move the company to Texas in a fit of anger, which shows that in their eyes, Texas is a little more protective of business.
Although the judge ruled that it should not be given, Tesla still hopes to vote through the shareholders' meeting to award Musk the current year's compensation. The question arises as to why this reward should be awarded.
There are actually two reasons for that. First, it's a good bet. What was the situation at that time? It's not that Tesla has been smooth sailing, Musk can get the money while sitting and lying down. In fact, the VAM decision is in January 2018, and this time is very critical.
Friends who are familiar with our science and technology training camp know that I only publicly declared that Tesla is a good company at the end of 2018 and the beginning of 2019, and I can support it with confidence.
Because Musk encountered a very serious challenge in 2018. Before that, although Tesla had the Model S and Model X, it sold only tens of thousands of vehicles a year. The reason is actually very simple, that is, the car is too expensive, a car costs about 100,000 US dollars, which is a relatively luxurious car, and most people still can't afford it. So Tesla decided to launch a very cheap family car, the Model 3.
However, mass production of the Model 3 has been delayed because it is still very difficult to achieve mass production in the United States. Especially in the summer of 2018, Musk simply lived in their factory for several months, just to solve the problem of mass production.
At the end of 2018, Tesla's relatively low-end people-friendly models finally achieved mass production, and in 2019, the production and sales of Model 3 reached 500,000 and 1 million.
So we can say that it may be because of this incentive in early 2018 that Musk is more diligent in solving problems. Of course, we believe that Musk still has a full entrepreneurial spirit, and he should struggle without this incentive.
But no matter what, we have to know that it is the incentive that comes first, and Tesla finally lays the foundation for success.
Actually, I believe why Tesla is giving such a generous reward, because in January 2018, they themselves were not sure if they would succeed.
So at this time, Musk has made a contribution and given a reward, and I think it's right. We can't say afterwards that the company is already so big, and we don't give rewards, or we don't give away the rewards promised back then, which is not in line with the entrepreneurial spirit and does not support innovation.
The other thing that's important, what's that? Actually, Tesla hasn't been successful yet. Not because of the recent decline in the stock price, the recent decline in Tesla's stock price has nothing to do with its long-term development, just a short-term fluctuation.
What really lays the foundation for Tesla's future success is another problem, which is that the overall development law of the electric vehicle industry has three waves of innovation. The first wave is electrification, replacing gasoline vehicles with electric vehicles. The second wave is called intelligence, which is the difference between electric vehicles and each other, and the difference in competition mainly depends on intelligence, mainly in-car intelligence, out-of-car intelligence, and automatic driving. The third wave is what we call transportation services, which are called servitization.
When the car is already smart, your driving pleasure is gone, then you don't want to own a car very much, you want to use the car at any time.
At this time, there will be a future self-driving version, an unmanned version of Didi or Uber, which is a big business, and it seems that Tesla is the most likely to get it.
Of course, it is also due to Musk's foresight that he has done a lot of technical pre-embedding before. Including their choice of technical route is also deliberately chosen visual route, so that it is easy to upgrade in the future, because the hardware is less likely to need to be upgraded.
In this way, even the cars that have already been sold can be transferred to the existing cars once the software functions of autonomous driving are realized, so that the existing cars can achieve stronger autonomous driving capabilities. FSD V12, which is now available, is one such example.
We believe that their autonomous driving capabilities will further improve in the future with the adoption of a large number of vehicles. If this thing is not done well, Tesla's previous achievements may be lost, and the victory will not necessarily be locked.
These things need a strong leader to promote, so at this time, Tesla's development still needs Musk, and Tesla's shareholders can still settle this big account.
In addition, to make a teaser, this Sunday's outpost AI class will have a meal, the keynote speaker Tina will explain how to deploy an open source model, teach you to play with Llama3, welcome interested friends to scan the QR code in the course poster below, sign up for the class.
The above is today's content, more detailed industry analysis and underlying logic I will share in the science and technology training camp. Welcome to pay attention to the global outlet WeChat account and sign up.
Wang Yuquan has to be heard, and we'll see you tomorrow.