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Tesla's Odd 8-Ks Omit A Lot

Mar. 09, 2018 2:44 PM ETTesla, Inc. (TSLA)154 Comments
Investor Gator profile picture
Investor Gator


  • Another executive departure prompts another 8-K.
  • Why does Tesla omit the single most important detail in these filings?
  • It's a loophole.  Tesla can comply with the letter of disclosure requirements while leaving investors short of vital information.


On March 8, 2018, Tesla (NASDAQ:TSLA) announced that Eric Branderiz left the company. Who's that? The terse filing left many investors asking that same question and searching Google. For the record, he was the Chief Accounting Officer.

Executive Departure and Appointment Disclosure Requirements

Why do public companies file 8-Ks when top executives or directors depart the company?

It's not a trick question. In addition to the requirement to file periodic quarterly and annual reports, the SEC also requires public companies to file current reports on Form 8-K to disclose events from a specific, comprehensive list of events that are considered material. You can find that list here.

Looking at Item 5 on that list, which deals with corporate governance and management, we can see that section 5.02 deals with executive officer and director departures:

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

Who is covered under this item? Any senior executive officer, which, according to the SEC, is a high-level executive officer—such as the chief executive officer, president, chief financial officer, chief accounting officer or chief operating officer.

Interestingly enough, when a replacement is hired, the disclosure explicitly require companies go a step further:

“Required disclosures include (1) the name, age and position of the officer, (2) the date of the officer’s appointment, (3) a brief description of the material terms of any employment agreement, (4) related party transactions between the officer (and entities related to the officer) and the company, (5) family relationships between the officer and other executive officers and directors, and (6) the officer’s business experience during the last five years, including the name and principal business of any organization in which his principal employment was carried on”

So is the company required


This article was written by

Investor Gator profile picture
I publish some of my investment ideas on Seeking Alpha because I believe the feedback and discussion can be a valuable part of the decision process.

Analyst’s Disclosure: I am/we are short TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (154)

Investor Gator profile picture
time for another 8-k!
Seems they are still wordsmithing that 8-k Gator.
Investor Gator profile picture
kcdowntown: "Seems they are still wordsmithing that 8-K..."

I *think* they technically have four days. Maybe they are thinking about including the title this time?

In the meantime, they are busy filing with the SEC news articles sent to shareholders to fluff the shareholder vote for Elon's comp plan
Gator - looks like we’ll get it after the close on Monday. Maybe their legal department is having defections as well. It’s a one sentence disclosure if history is any guide. The defection of the accounting group is the biggest signal the bulls are ignoring. There are many more but this one should be hitting the bulls exceptionally hard.
When everyone and their mother is short a stock, go long. Tesla has made too much progress to ever declare bankruptcy.. another capital raise (or two), maybe. But they’ve got a long way to go. LONG TESLA for life.
Former lower level TSLA employee here, I can verify the lack of transparency isn't just in public filings, it is also internal. I would bet that most employees have no idea what is truly going on at higher levels, especially those on the front lines of sales and service. They take all of the abuse from customers waiting 3 weeks for service on $100k cars, due to lack of staffing and low volume of service locations, but they almost certainly don't know how bad the financial situation is that is preventing them from expanding their service capabilities and helping customers.

Also, it was always a controlled chaos getting vehicles delivered on time, especially at end of quarter, and the unreliable and low quality Model 3 ramp is only going to make that much worse for those teams.
Trevor Courtney profile picture
Ex Tesla, I'd be quite curious to learn more about your experience. Having worked at the company, you have a unique perspective that many, if not all, of us here don't have.
I have been lurking SA for a few months and don’t have a lot of formal investment knowledge, but reading all of this about TSLA has made me realize I may have more to contribute than I originally thought.
Mikey4 profile picture
I've been curious for awhile to hear more about rumor from another insider on the glue they use and how they supposedly skip a crucial glue warming step to save money? Do you know of that and if it's accurate?
JBeans profile picture
TLDR: controller got sick, left company.
Dansplans profile picture
I used to think that TLDR meant "too long didn't read". but since this was actually fairly short, it must actually mean "too lazy, didn't read."
Terrific article Gator, and great comment thread.
uptick_rule_now profile picture
why enter a fact when you can avoid it as Tesla does everyday if they tweet or announce something.
It does not mean they can't recover but right now you are the guy who jumped in save a 200lb gorilla, can you save him? No. You love him we do too. But time to let go. Short. Big Time.
Take Profit. Short. Whatever. Sell.
TSLA is going down
Sell Sell Sell ... You will literally thank me people. SELL.
howarddork profile picture
Branderiz's linkedin page (still shows a Tesla parked in a garage of a nice home) lists him as Chief Accounting Officer and Controller. Based on his graduation date, he's in his late 40s. It's really very unusual for someone that age to walk away from 3 or 4 million dollars regardless of how stressed out they are or how much their kids miss him. I agree that if it had been a friendly departure he would have stayed on until they found a replacement. Someone, probably the Treasurer, made a decision he couldn't live with so he left (like Trump's chief economic adviser). Trying to spin this as, "Nothing to see here" is being willfully blind to a serious freaking problem in Tesla's c-suite.
Mike Smitka profile picture
I'm not good at repartee, I try to remain the sober economist. But I just had my second bourbon...

I don't associate "creative" and "accountant" but surely the startup environment must include such. (The accounting profs around me are creative ... MA in creative writing, semi-professional musician ... just not in accounting.) Your company will face a cash crunch or two, will have executives who should have been told "time out" – sit in the corner for six months. Finding a way to get past the toddler stage, maybe even reach adolescence! Now that is an accountant.

But when the end game now looks ... well, when you have to start thinking about the end game it's time to say "ta-ta" and look for an employer who may let you leverage yours skills into a real fortune, or at least a viable company.

On the other hand, the departure could be a very real health issue. Because anyone and everyone can google who he is, that the details aren't in the 8-K is hiding nothing. And so I read nothing into it. Indeed, Branderiz may have been the boss of the person filling out the form. If he was a good boss, I'd probably not want to dwell on details, and would not have typed in his title.
Investor Gator profile picture
Mike Smitka: Thought provoking comment, thank you.

As for "I'd probably not want to dwell on details, and would not have typed in his title."

Let's see. I'm on my second bourbon of the night, too. And hoping not to get hit by another Bulleit after this one, but who knows, the night is young.

As an experienced finance person in that role, your decision would be informed by all the other similar forms you had signed in your career. Each an every one carrying the title. And it would be informed by the fact that every other filer includes the title in their departure forms. How would you justify it to yourself? Just a minor detail to be shrugged off? Would professional pride factor in?
insaneinthemembrane profile picture
Let's see what Fred Lambert's "Take" on this news is, since he's always so eager to give you "Electrek's Take":


Oh. Nothing.

But I'm sure glad Fred Lambert offered "Electrek's Take" on Elon's new compensation plan:


"It’s without a doubt a very generous plan. Like I said, it could make Elon worth almost $200 billion if he achieves all the milestones. But then if he does, and of course Tesla as a whole, achieve all the milestones, long-term shareholders will also see some unprecedented returns."

Like clockwork. But no news whatsoever about ISS and Glass Lewis opposing that same compensation plan. Weird.

Now, let's see where he makes his disclosure that he also benefits from Tesla...

...Oh, here it is:

I'll be rooting for you when you enter the room as Elon's co-Defendant, Freddie!
When the Solomon disaster forced Buffett to take charge of the Company in the early to mid 1980's; Buffett appeared alone in front of Congress and said: "I'm going to answer your questions as though I've never met a lawyer."

Musk fills out SEC disclosure form like a man that has several lawyers telling him how it needs to be done so as to provide the least amount of important information.

Once again, the Leopard can't change his spots.
B4B00SHK4 profile picture
Thanks for the article. Shocking to me is that there is no replacement. So, does Deepak Ahuja take on those responsibilities?
Like the Sales Team, Accounting now also reports directly to Elon.

Guess being a CEO of 3-4 different companies wasn't enough, so he decided to take on Head of Sales and Chief of Accounting's responsibilities as well!

Roger Knights profile picture
"Shocking to me is that there is no replacement."

This suggests that either the ex-CAO left on short notice and/or that few in that profession want to work at Tesla.
Investor Gator profile picture
b4b: "So..."

No. Elon moves his sleeping bag across the factory and upstairs to the finance suite where he camps out in front of the SAP/Oracle terminal.
Brando Tip profile picture
What an incredibly SHORT sentiment. Any investor who is going to even READ the 8-K, and pay attention to that line item, will simply google their name, if they do not know the person already.
Exactly, so why bother with hiding it?

Omitting that from the 8-K shows the level of contempt Tesla has for its shareholders.
Investor Gator profile picture
kirisame: exactly. Every. Other. Company. does it the right way.
But of course that was my original post --- Musk has contempt for everyone outside his coterie of minions and relatives. Customers, employees, shareholders, regulators, you name it. He is above it all, needs not follow the rules, and needs not explain himself to you or anyone else. That is his trademark and modus operandi; and asking why he can't be like everyone else is a fruitless exercise. He can't because he isn't. He is spoiled child who always got his way in the past and will not abide anyone questioning or challenging him.

A truly reprehensible creature.
NDAs are always part of the equity grant agreement, not to mention the termination agreement ( e.g. “ we’ll vest these options as long as you keep your mouth shut”). Just go away silently
Question for the author and any attorneys familiar with securities law. One of the hallmarks of the Musk enterprise is NDAs (non disclosure agreements). Would he have insisted on any of his officers and senior managers signing an NDA as a condition of employment? If so, would an NDA carry any weight with respect to an officer being questioned by regulators? What are the legal issues and implications here?
NDAs do not and cannot apply to criminal investigations.
In fact, as I understand it NDA's do not stop a court from compelling testimony in any case at all -- although typically a court will use protective procedures to protect confidential information. Boilerplate language on NDAs covers this by requiring the individual compelled to provide information in a legal proceeding to give the company notice so that the company can go to the court and move for appropriate protections.
xonkd profile picture
Worry Wart

'to give the company notice so that the company can go to the court and move for appropriate protections.'

And shred the documents and wipe the servers clean.
With all due respect to the author, whose work has been educational and excellent, Tesla does not have 'more work to do' concerning public disclosures. The Musk enterprise has proven its open disdain for the investing public in all things related to information. The deliberate obfuscation in metrics, incomplete disclosures, hedging, and just plain old garden variety lies are embedded in the corporate culture. His approach to the vast unwashed is to have them turn over their money, then thank him for the privilege of funding his ventures. Don't ask questions --- don't think to challenge or question him. End of discussion.

If anyone has work to do it is the SEC. If Tesla's disclosures don't meet minimum regulatory requirements, then the SEC needs to demand revised filings. If they are legally sufficient, then there is nothing more to be done or said. By now we should have all gotten used to the fact that Musk cares not a whit about what anyone things they are owed and has no use for the niceties of abiding by laws and regulations.

If the SEC does nothing about this or any other of his filings then we know the answer -- they are legally sufficient and hence all we should expect going forward.
Investor Gator profile picture
TimNeuman: fair points, all. But what the heck is going on at Tesla that even something as simple as an executive departure form has to be so poorly executed? Every other company manages to do it right. It's almost like they take pride in neglecting good disclosure practices
The Crysenburger profile picture
you've never spent a lot of time with a narcissist have you sometimes they just buy for no reason other than that's what they do.

if you're at the beach and all of the grains of sand are tan and there's a couple of white grains mixed in it's kind of hard for you to see the white cranes but if the number of grains are reduced then it becomes easier to pick out the white grains so a narcissist will just keep throwing the tan grains at you the tan grains are lies.

you'll never be able to figure out what the truth is and what the LIE is because there's just so much nonsense you just can't pick through it all to separate the truth it's impossible. so they'll tell lies for no other reason than to maintain this pattern even when there's no point to the lie .

you're only hope at sanity is to just walk away in a personal relationship because the manipulations are never ever going to end.
Andreas Hopf profile picture
Exactly what Jim Sloan wrote in his seminal SA article https://seekingalpha.c... when contemplating, in 1993, what the internet will effect upon society at large:

"It's the end of human reason," I joked at a dinner party. "A new discovery in quantum theory now stands on the same plane as a UFO sighting in rural Arkansas. Science and rationality are about to become a cult with very few members. Mark my words."

The deluge of information has made it neigh impossible for most to tell shit from shinola, so to speak - facts buried in an overabundance of fakery, research buried in an overabundance of opinion. Hundreds of years of enlightenment are put at risk within a comparatively short time.

This won't end well.
aldol profile picture
tesla is a cult not a car company
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