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“Never Incorporate Your Company in Delaware”

That was Elon Musk’s response to the ruling by a judge in Delaware who yesterday struck down his $55 billion Tesla pay package.

Even to some of your editors, this seems to be an extravagant and hard-to-justify deal for Musk. But after all, Musk put up most of the money to start the company, which under his leadership now has a $600 billion market cap. Also, Musk reportedly doesn’t take a conventional salary, but is paid on a long ago agreed upon incentive system based on the valuation of the stock and company performance.

Nobody twisted anyone’s arm to buy Tesla stock. There is a Tesla board of directors and a compensation board – though the complainants allege that Musk stacked that with his friends.

Musk has also made tens of billions for the shareholders and Tesla has become one of the Magnificent Seven firms that have driven the stock market into the high heavens.

The judge ruled that the pay package was “not reasonable” –  and maybe that’s true.

Here’s our concern: decisions about how a company is run and how much executives are paid, should be made through corporate governance and at shareholder meetings, not in a courtroom. (See item
Below on Bernie Sanders’ latest gambit.)

Once upon a time, Delaware was the best place in America for a company to go public.

We wonder whether that will remain the case.

Unleash Prosperity Hotline


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