Your Moment of Schadenfreude

The Delaware Chancery Court has just voided Elon Musk’s multi-billion dollar Tesla pay package.

Chancellor Kathaleen Saint Jude McCormick should probably do something about the board of directors as well.  These are a collection of relatives and business partners of Musk, and not only allowed Musk's self dealing (Solar City) to continue completely unencumbered, but in many cases (Kendall Musk) profited from his double-dealing as well:

Elon Musk, the chief executive of Tesla, suffered a stunning rebuke Tuesday when a Delaware judge voided the pay package that helped make him a billionaire many times over and the world’s wealthiest human being.

In a decision that cast a harsh light on the behavior of Mr. Musk and Tesla’s board of directors, Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery said the chief executive had effectively overseen his own compensation plan — currently worth about $50 billion — with the help of compliant board members.

“The process leading to the approval of Musk’s compensation plan was deeply flawed,” the judge said. She ordered that the contract that gave Mr. Musk “the largest potential compensation plan in the history of public markets” be voided, and told parties in the case to work out how Mr. Musk would return excess pay.

Some compensation experts said the decision would send a warning to other companies that awarded their top executives very large pay packages.

I certainly hope that it sends a warning to other companies, but never underestimate the ability of American managers to not learn a lesson.

………

Greg Varallo, a lawyer who represented Tesla shareholders, said the shares would be canceled. That would substantially reduce Mr. Musk’s wealth and his stake in Tesla, which stands at about 13 percent after he sold shares to finance his acquisition of Twitter, the company he renamed X.

I love the slam that the judge put in her ruling:

“In the final analysis,” she wrote, “Musk launched a self-driving process, recalibrating the speed and direction along the way as he saw fit. The process arrived at an unfair price.” The pay package was not necessary to retain Mr. Musk nor motivate him because he already owned Tesla shares worth tens of billions of dollars, Chancellor McCormick said. 

Information given to shareholders before they voted to approve the package was “materially deficient,” she said.

Of course the information given was materially deficient.  Elon Musk is a God-King, never to be questioned, and if he is never to be questioned, then shareholders need no information.

………

The decision also raises questions about how Tesla’s board will deal with a demand by Mr. Musk this month for an even greater stake in the company. Mr. Musk said he needed to own 25 percent of Tesla to avoid takeovers and have enough control of the company as it develops robots and other artificial intelligence technology.

If his demands are not met, Mr. Musk said, he will pursue unspecified ventures outside Tesla. The company’s board, which is led by Robyn Denholm, has not responded publicly to his demand for a bigger stake in the company.

The response is to tell him to go fuck himself.

There is no way that he can actually do these things without using tech developed at Tesla, and even in California, where non-compete agreements are illegal (they are very legal under Delaware law), you do not get to use proprietary technology from a firm that you leave.

Also, while the threat of a trade secrets lawsuit might not dissuade Musk, it would dissuade anyone who followed him out of Tesla, and Musk, not withstanding his delusions of adequacy, lacks the technical chops to do this on his own.