Elon Musk has suffered a setback in court that could cost a significant portion of his fortune. Judge Kathleen McCormick, from the state of Delaware, USA, blocked the payment of US$55.8 billion (R$277 billion) from an agreement signed in 2018 between the billionaire and the car manufacturer Tesla.
Under the terms of the agreement, the amount will not be paid “in cash,” but will be paid in installments over a period of ten years. However, some shareholders were not satisfied with the amount that would be transferred to Musk. Investors considered the amount to be exaggerated, and also accused the board of directors of not working closely with the company's CEO and not acting truly independently.
The judge who heard the case classified the amount, which is considered the largest in corporate history in the United States, as “priceless.” The billionaire, who objected to the court's decision, still has the possibility of appealing the ruling.
On X, the old Twitter, Musk said: “Never incorporate your company in Delaware.”. In another post, he recommends that his followers, if they are going to open a company, do so in other US states such as Nevada or Texas, where Tesla is headquartered.
Interestingly, Delaware is considered a kind of “tax haven” within the USA, with flexible laws for establishing corporations. It is not surprising that many major companies are based in the US state. The list includes names such as Alphabet (Google), American Airlines, Apple, Coca-Cola, Ford, and Walmart.
Never incorporate your company in Delaware
– Elon Musk (@elonmusk) January 30, 2024
In the 200-page decision, the judge considered that the payment had been approved by advisers who appeared to already have some debts with the billionaire. McCormick also agreed that the billionaire had a very close relationship with some members of the company's senior management.
Ira Ehrenpres, the current head of the Remuneration Committee, according to the court, has been in a relationship with Elon Musk for at least fifteen years, while Antonio Gracias, who is also part of the committee, has known him for more than 20 years and regularly takes vacations with his family.
In the judge's understanding, because of this close relationship with some of the directors, it is not surprising that the terms of the agreement were not discussed and negotiated in more depth. Musk must appeal the decision. It is possible, then, that this story will continue to play out for a long time.
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