-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Delaware to Texas Incorporation
- Thread starter Buckminster
- Start date
I've wondered about this as well. And while not a lawyer, my next question / thought is who would be sued? The judge isn't a target for a lawsuit.
The legal recourse here is for Tesla to appeal the result. Whether that is actually good legal strategy, IANAL and do not have legal opinions. I do have layperson questions though - like when does the appeal get filed
"I am not a lawyer". The true cost of this decision has wider implications that what it will cost Tesla investors to ?re-compensate? this CEO ( I believe it will be very expensive ).
I assume that an appeal is considered fruitless in light of the political bias in Delaware, Tesla will relocate to Texas, based on the poll (judgement still requires resolution between parties).
Will this be the opportunity to split the shares, voting and non-voting in similar fashion to Google's? This could be the mechanism to resolve EM's request for 25% control... but (reaching halfway to the moon) ... it also could be a way to move toward a holding company for all EM companies. (most are Delaware).
Yes, Tesla the company he started and has made or been heavily involved in making most of the major decisions for since its founding. The company was close to running out of cash when this deal was made. The market cap has grown 10x since the deal was made. Why does there need to be a big downside for him other than his company failing and him wasting years of his life? If anyone could have done it why didn't someone else do it?
We can sit hear and make all of the moral declarations that we want about how much money any one person deserves to be able to earn but it has nothing to do with whether a judge should overturn a pay package agreed upon by the majority of shareholders.
And please don't misgender Judge Kathaleen McCormick I hear that can get you in trouble on the internet. Clearly you know that he (she) is a very reasonable man (woman) of law so I am not sure why you would want to offend in that way. LOL
CNN says otherwise.
I don't know all of the details of the case if I am being honest. But I have read sources from various sides of the political spectrum discuss it and my take is that he is getting hosed. I am not interested in having a moral argument about how much compensation one person "deserves" for the success of their company. He is the one that started Tesla, had the vision for Tesla, and turned Tesla into a nearly trillion dollar company. The shareholders agreed on this package (as far as I can tell). As a shareholder, I consider it money well spent if it kept him focused on the company and contributed to its success.
The judge has an interesting history, the 200 page decision reveals bias, and an activist agenda. Even the very first sentence reveals the appearance of bias. (BTW not all judges are men, and there are many judges that have a political agenda because they are often 'hired' or elected by politicians). If you search out for evidence of this bias, you will find proof that certain powerful political people have used the Chancery Court of Delaware as a bludgeon.
Your view regarding the what is in the 'best interest of Tesla' does not reflect the decision by a majority of shareholders.
MikeChicago
Member
You are correct. I missed that part.
I'll need to read into this more. Why would a judge reverse such deal then? It says that even excluding Musk and his brother's shares, there was still a majority who voted in favor. I think the issue at hand is excessive executive compensation, which has been an issue for some time. I don't think anyone really has an answer on how to best address this problem. Income inequality has only been getting worse. On the other hand, as someone who has co-founded a thriving business, I can tell you the risk entrepreneurs take on to create a successful company is very real and it should be rewarded.
sleepydoc
Well-Known Member
You can split hairs if you want but Musk is listed as a cofounder. He was chairman of the board back in early 2004. They weren’t doing anything at scale before his involvement. He provided most of the early funding. He led the company from a small startup to the most valuable car company in the world. There is no Tesla motors as we know it without Elon. You want to focus on gotchas feel free you didn’t even know the sex of the judge heading up the case but assured us that he (who is a she) is a very reasonable man of law.
who gives a sh!t what is is listed. he might be named as messiah - but he is not...
Founding (2003–2004)
The company was incorporated as Tesla Motors, Inc. on July 1, 2003, by Martin Eberhard and Marc Tarpenning.[6][7] They served as CEO and CFO, respectively.[8] Eberhard said that he wanted to build "a car manufacturer that is also a technology company", with its core technologies as "the battery, the computer software, and the proprietary motor".[9]Ian Wright was Tesla's third employee, joining a few months later.[6] In February 2004, the company raised US$7.5 million (equivalent to $12 million in 2022) in series A funding, including $6.5 million (equivalent to $10 million in 2022) from Elon Musk, who had received $100 million from the sale of his interest in PayPal two years earlier. Musk became the chairman of the board of directors and the largest shareholder of Tesla.[10][11][8] J. B. Straubel joined Tesla in May 2004 as chief technical officer.[12]
A lawsuit settlement agreed to by Eberhard and Tesla in September 2009 allows all five – Eberhard, Tarpenning, Wright, Musk, and Straubel – to call themselves co-founders.[13]
You posted a Wikipedia link that says he’s listed as a cofounder. What’s your point? That some guys incorporated a company and didn’t do anything until Elon joined and financed it? Do you want an asterisk next to my statement that he started the company? Put an asterisk.
It changes nothing about his compensation package being denied by an activist judge? Your fixation on this point just shows you have no actual argument to support that decision.
The point of the judgement has less to do with the amount he was to receive and instead the deception used to secure the vote. Maybe the vote would’ve ended up the same either way, but the point is you have to follow the rules and be honest about the process and the package being voted upon.
Some people on here posting about not being a lawyer but then trying to discredit the judge because they’ve made decisions you don’t agree with. The problem is the people here are not lawyers and haven’t seen the details of this case and are making those statements based on unproven opinions. If the judge had ruled in Musk’s favor nobody would say anything. Maybe y’all believe your shares have more value with Musk and so if he’s not happy, you’re not happy. Fair enough. But going as far to make claims about things you are ignorant about doesn’t prove anything or help the issue. There are paths to take to get Musk to focus more on Tesla. Such as a newly proposed pay package without the deceptive practices to secure it.
My take is that Musk is spread too thin with all the companies he has invested in. Tesla is not his priority any more and a pay package nor 25%+ of the shares is likely to change that.
Daniel in SD
(supervised)
What are the chances that institutional investors vote to incorporate in another state? Especially Texas whose new "business courts" haven't even been setup yet. That seems like an unnecessary risk for shareholders. The only risk of staying in Delaware is that Elon will be sad.
The board can just negotiate a new pay package.
The board can just negotiate a new pay package.
JWLV
Member
There was a time when I used to listen to everything Musk has to say as valuable statements. Now, not so much because so many things he says are just utter nonsense or pure speculation.
He is just one man voicing his incredibly loud opinion about one Delaware court and one particular judge. He's the man with all the gold and his voice is the loudest. But the signal to noise ratio from Musk is so low these days that I trust more what thousands of other corporations are doing in Delaware instead of what one man is wanting to do in Delaware.
He is just one man voicing his incredibly loud opinion about one Delaware court and one particular judge. He's the man with all the gold and his voice is the loudest. But the signal to noise ratio from Musk is so low these days that I trust more what thousands of other corporations are doing in Delaware instead of what one man is wanting to do in Delaware.
Their argument seems to rest on the idea that it was somehow obvious he would lead the company to become the most valuable car company in the world and therefore these milestones were much easier to hit than advertised. And that the board negotiating the deal was not sufficiently "Independent". I was a shareholder back then and I was prepared for my shares to go to zero (though I couldn't afford that many), it was far from obvious that the company would succeed. Of course nobody would say anything if the judge ruled in favor of the agreement that the shareholders voted to approve... you are acting as if both outcomes are just two heads of the same coin when they are not.
This also, from what I have read, means that new board members have to be added because the current board has been ruled "non-independent". So they can't just simply renegotiate his pay package or it will likely just be voided again. They have essentially deemed the current corporate structure of Tesla to be inappropriate for a public company. New board members deemed to be "independent" will have to be added first before any renegotiation can take place that won't be struck down again.
Tesla probably isn't his top priority anymore, it seems like Mars is, as a lot of the hard work to establish Tesla has been done. I don't expect another 10x return on my shares over the next decade. But that isn't the point... it was in no way obvious Tesla would be this successful back then when it was negotiated. If Tesla had gone bankrupt nobody would have batted an eye about this package.
JWLV
Member
I suppose institutional investors generally do not take many risks in the unknown. Otherwise they'd be putting their money in bitcoin
Similar threads
