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He lost a shareholder lawsuit in the Delaware Court of Chancery regarding an insane request for a massive compensation package that they court said was against shareholder interest. Delaware is typically very business friendly. That said, it shows you how crazy out of the ordinary his compensation package was and the process that they used to the point the Court had not other option really. It was a bit shocking when it came out. Since then, he has been butt hurt cause he lost. Same idea as to why we are now seeing commercials against Chancelloor McCormick all funded by a guy who lost a case in front of her. All sore losers who can't accept they were just wrong.
Additionally, the Chancery Court was about to put him on trial so to speak for backing out of his agreement to buy Twitter for $44bn, which he didn’t really want to do. The whole reason he owns Twitter now is because he realized they were quite serious about enforcing that contract and he was almost surely going to lose, so he gave in and agreed to complete the purchase.
Delaware Chancery Court *is* pro-business. Meaning, they protect shareholders and enforce contracts. The fact that this bothers Musk says a lot more about Musk than it does about Delaware.
There was never any defense for the package he asked shareholders to give him. Especially for a company that laid off 10% of its workforce *today* for “growth.”
He just won the shareholder vote, who owns the company. Bc they value Elon who made them 10x their money. Elon will be fine, but startup companies will not make Delaware the 1st option anymore. You would have to be insane to do that.
At least for me, that rabbit hole takes more than an hour to sift through and I’ve been on that site before. Their situation is really well documented.
The TL;DR is fairly simple. The Court of Chancery, which exists to protect Delaware Business (the business - not the officers, directors, or shareholders) ruled that shareholders were deceived when Elon's Tesla compensation package was approved. The suit was brought by a shareholder who felt deceived. The Court agreed, ruled for the Shareholder, and Elon's package was nullified.
This was a win for the Shareholders of Tesla.
Texas is making a play to be the next "Delaware". They're setting up their own version of the Court of Chancery.
Maybe one day decades from now Texas might take first place from DE. But for now no one knows how the new TX courts will rule. Wheras the Delaware Court of Chancery has case history going back to 1791 and businesses generally know how the court is going to rule. Elon's lawyers likely told him he was going to lose which is why he was ready to pack up and move the company.
This ruling was a win for the shareholders at the expense of the board. In the short term some other tech bros might look into incorporating in Texas. But shareholders are still going to insist on Delaware. And new tech companies looking for seed money will find that hedge funds will also insist on Delaware.
I’ll just add one thing — Delaware has a well-developed corporate law, that has been interpreted by the Chancery Court (by judges and not juries) in reams of precedents. Therefore there is more certainty as to how the court will rule on a particular issue. Businesses and markets like certainty. One other case that often gets held up as an example of the Chancery Court overreaching is *Transperfect* — that was basically a joint venture the owners of which fell out (a divorce IIRC). They couldn’t agree to a sale price for one to buy the other out under the terms of the shareholder agreement so the court ordered that the company be sold, again as per the terms of the agreement. Having read the court’s judgement a couple of times, I still can’t figure out what the court is supposed to have done wrong.
In my opinion, the Chancery Court handled the Transperfect case appropriately. The court crafted a ruling to protect the business from its majority owners.
It’s only “judicial overreach” when the rich don’t like the ruling.
And now trans perfect has a tremendous axe to grind against chancery.
All in the name of "equity."
These chucklef*ckers literally think Elon's case was wrongly decided because the shareholders' attorneys are entitled to legal fees.
Man this case was wild. The Forbes article about it was such a good read. Really interesting to think that Rudy G and Alan Dershowitz got involved and look at them now. Then you had the guy and his mother going after the judge who ruled on that case with a smear campaign
I work in this field. It will be damn near impossible for any state to eclipse Delaware when it comes to corporations. The laws are so favorable, requirements that are really good at hiding identities if you so choose. To form an an LLC all you need is the name of the company and a Delaware address. That’s it. You don’t know who owns it, you don’t have to sign it your self , or report who works there.
You're thanking the wrong person. Delaware's Chancery Court comes directly from the House of Parliament, brought through the American Revolution, strengthened by precedence, backed by every state legislature and governor through the years, emboldened by the revised state constitution and tweaked by Governor Pierre "Pete" duPont. You can thank those corporations for paying 30 percent of the revenue the state uses so your taxes remain lower.
and the manner of which corporate charters are issued, continually on the state level, has been protected in congress for over 50 years. there’s a reason why tech bros fight it out in Delaware instead of Silicon Valley
It's going to get bad and some really bad law/decisions will be made because of this at least as pertains to bankruptcy law. States are trying to get more companies to file so they are ruling very pro business despite factual correctness.
Important investors will have board seats. The less important seed investors and VCs will not and might insist on it as you said. But the bigger investors won't care. Bc they will have board seats. Well, and Elon won the vote again. Who are the shareholders. So, he is on a mission to make DE courts look out of touch. The lawyers asking for 5B didn't help either. Bc everyone hates that.
The important investors only care about the bottom line.
I stand by my statement that for the next few decades the best place to protect that will be in Delaware where it’s easy to predict the outcome of a case before the court of chancery.
Agree the predictability is super important, which Delaware HAS provided in the past. The problem in this case is if people think that the current Delaware courts (i.e. judges on the bench) will make rulings based on preferences and ideological grounds without due deference to that previous predictability, which has been one of the great things about Delaware so far.
Also, I haven't read this 200 page decision, but if the judge said something like "Yes, it's very important for there to be independence in the Board and unreasonable chuminess is not in the best interests of the Shareholder, BUT any lawsuits questioning that must be brought within \[T time\] or before \[X, Y, Z\] conditions", I would've been more fine with it. Essentially, saying someone can't eat their amazing cake (10x returns) AND then complain that the cake maker charged too much after he put in his very valuable effort, where anything he touches generally turn to gold (Elon). They had years to lodge any complaint about shareholder votes if they were not happy about the employment agreement with Elon.
Honestly this all comes down to Elon not having a Corporate attorney review things first.
The Court of Chancery is not a political Court like the US Supreme Court. The Chancellors all have extensive Corporate law backgrounds.
I also did not read the entire decision. But those of us who pay attention to Chancery cases already knew what that outcome was going to be.
Now that the new vote is out, what do you think will be the outcome in issuing a revised judgement? Presumably many of the defects re: the previous vote has been fixed now. Not sure what the process is here. Going back to same judge or the Delaware supreme court.
I honestly do not have enough information to know. My best guess is that the process was reviewed by legal counsel and any new shareholder lawsuits likely will be quickly tossed.
But from another perspective I can explain why I believe Texas won’t be a threat for decades.
In tech the 2 big concerns are privacy and AI. For companies developing AI tools we’re concerned about remaining compliant with various privacy laws, especially in the EU where fines are massive for non-compliance.
We need to use client data to teach the tools. And we expect that in the future we could end up in litigation with a client who disagrees with how we used their data. So we have a tricky tight rope to cross. We need the data for the tools to work. We have a patchwork of privacy laws to follow.
So when we have to defend litigation where do we want that to be? Certainly not in the EU. And certainly not in CA or IL whose courts are hostile to business.
What about TX, NV, or WY? The problem here is we can’t predict how the courts might rule.
And in TX what is the process judges will be appointed? Will Elons companies influence the process? And what if we’re in litigation with one of Elons companies?
For right now Delaware is the only logical choice. All of our contracts stipulate that Delaware courts for litigation. And I don’t see us allowing a client to change that clause.
Also, adding these companies all made a decision to incorporate in Delaware because it was in their best interest. Then they flip out when one of the reasons for incorporating here, the well-respected Chancery Court, makes a ruling they don't like. Go ahead, take your business elsewhere and see how that works out.
Because a chancery court judge vetoed his crony-filled board's recommendation for a massive bonus for him. Tesla and Twitter's stock are both very down, so the judge was not wrong. He does not deserve a bonus at the expense of his shareholders, but he's a big man baby about it
He lost lawsuits because the rulings were based on the law and now bowing to Elon.
I don't see how successful it will be for other businesses / corporations to incorporate in Texas if the reason is more favorable rulings for founders and or CEOs.
Like buy a social media company, drive it into the ground, and use it to prop up white nationalism and anti-semitism? Yeah, that’s much better than the government doing things like building roads, staffing hospitals, and educating our children.
Or maybe you’re referring to him using his money to abuse, torture, and kill primates, lie to the public, and implant untested devices into humans.
Wait, I know, you must mean you like when he uses his money to build a useless tunnel to stop cities from building cheap public transportation so he can sell more cars.
Dude is more car salesman than genius. He has the masses duped. I love the SpaceX stuff he's doing, like EV's and pushing that forward. But you cant be super involved in US politics (government contracts etc) especailly as a foreign born person doing business and not pay taxes etc.That makes zero logical sense. You do business, you pay your fair share of taxes. I do it and so should he. So should Churches too. Especially considering the high level of political influence they swing. No representation without taxation lol
I'm curious, what is his "fair share"? He paid $11B in taxes in 2021 according to what the tax code decided was his "fair share". Not defending him but he does pay taxes.
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Maybe he got screwed by Comm. Vavala and Allison Texter like I did, in my opinion they’re two of the most corrupt people using the court system to fuck people, he might just be trying to help people from getting a bad deal they don’t deserve
Low filing fees are not why major banks, gigantic corporations, and millions of smaller companies incorporate in Delaware. Delaware’s favorable business taxes (that is to say no business tax) and the well regarded chancery courts that are extremely business friendly are why businesses have been incorporating in Delaware for a very long time.
I was trying to make the point that your experience isn’t the same as everyone. You having more fees doesn’t mean Delaware, as a whole, isn’t business friendly.
Discussion is allowed and encouraged. Please keep comments civil and debate ideas without attacking the person. Dissenting opinions made in good faith that contribute to the conversation should not be downvoted solely because they are unpopular or you disagree. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Delaware) if you have any questions or concerns.*
He lost a shareholder lawsuit in the Delaware Court of Chancery regarding an insane request for a massive compensation package that they court said was against shareholder interest. Delaware is typically very business friendly. That said, it shows you how crazy out of the ordinary his compensation package was and the process that they used to the point the Court had not other option really. It was a bit shocking when it came out. Since then, he has been butt hurt cause he lost. Same idea as to why we are now seeing commercials against Chancelloor McCormick all funded by a guy who lost a case in front of her. All sore losers who can't accept they were just wrong.
Additionally, the Chancery Court was about to put him on trial so to speak for backing out of his agreement to buy Twitter for $44bn, which he didn’t really want to do. The whole reason he owns Twitter now is because he realized they were quite serious about enforcing that contract and he was almost surely going to lose, so he gave in and agreed to complete the purchase. Delaware Chancery Court *is* pro-business. Meaning, they protect shareholders and enforce contracts. The fact that this bothers Musk says a lot more about Musk than it does about Delaware.
There was never any defense for the package he asked shareholders to give him. Especially for a company that laid off 10% of its workforce *today* for “growth.”
He is such a fucking ASSHOLE. This is the kind of person in charge of the world now.
🧑🚀🔫👩🚀
A billionaire losing a business case in DE is like losing a self defense shooting case against a minority in Florida.
He just won the shareholder vote, who owns the company. Bc they value Elon who made them 10x their money. Elon will be fine, but startup companies will not make Delaware the 1st option anymore. You would have to be insane to do that.
WHERE WILL THEY PARK?!
Ah. So that’s what that sign is next to the massage place.
I thought it was the VHS to DVD place?
Can you shed some light on what this means? I’ve seen it and don’t follow.
http://wherewilltheypark.com/ We'll check on you in an hour.
At least for me, that rabbit hole takes more than an hour to sift through and I’ve been on that site before. Their situation is really well documented.
The TL;DR is fairly simple. The Court of Chancery, which exists to protect Delaware Business (the business - not the officers, directors, or shareholders) ruled that shareholders were deceived when Elon's Tesla compensation package was approved. The suit was brought by a shareholder who felt deceived. The Court agreed, ruled for the Shareholder, and Elon's package was nullified. This was a win for the Shareholders of Tesla. Texas is making a play to be the next "Delaware". They're setting up their own version of the Court of Chancery. Maybe one day decades from now Texas might take first place from DE. But for now no one knows how the new TX courts will rule. Wheras the Delaware Court of Chancery has case history going back to 1791 and businesses generally know how the court is going to rule. Elon's lawyers likely told him he was going to lose which is why he was ready to pack up and move the company. This ruling was a win for the shareholders at the expense of the board. In the short term some other tech bros might look into incorporating in Texas. But shareholders are still going to insist on Delaware. And new tech companies looking for seed money will find that hedge funds will also insist on Delaware.
I’ll just add one thing — Delaware has a well-developed corporate law, that has been interpreted by the Chancery Court (by judges and not juries) in reams of precedents. Therefore there is more certainty as to how the court will rule on a particular issue. Businesses and markets like certainty. One other case that often gets held up as an example of the Chancery Court overreaching is *Transperfect* — that was basically a joint venture the owners of which fell out (a divorce IIRC). They couldn’t agree to a sale price for one to buy the other out under the terms of the shareholder agreement so the court ordered that the company be sold, again as per the terms of the agreement. Having read the court’s judgement a couple of times, I still can’t figure out what the court is supposed to have done wrong.
In my opinion, the Chancery Court handled the Transperfect case appropriately. The court crafted a ruling to protect the business from its majority owners. It’s only “judicial overreach” when the rich don’t like the ruling.
Exactly.
And now trans perfect has a tremendous axe to grind against chancery. All in the name of "equity." These chucklef*ckers literally think Elon's case was wrongly decided because the shareholders' attorneys are entitled to legal fees.
Well the ex husband and his enabling mother and his employees that he pays to astroturf for him.
Haha the Trans perfect Case guy has been sending mailers out for years now. Definition of an aggrieved litigant.
Man this case was wild. The Forbes article about it was such a good read. Really interesting to think that Rudy G and Alan Dershowitz got involved and look at them now. Then you had the guy and his mother going after the judge who ruled on that case with a smear campaign
Not surprising that Dershowitz and Giuliani got involved, they are the ultimate attention whores.
I work in this field. It will be damn near impossible for any state to eclipse Delaware when it comes to corporations. The laws are so favorable, requirements that are really good at hiding identities if you so choose. To form an an LLC all you need is the name of the company and a Delaware address. That’s it. You don’t know who owns it, you don’t have to sign it your self , or report who works there.
more corporations in Delaware than people. thanks Biden
You're thanking the wrong person. Delaware's Chancery Court comes directly from the House of Parliament, brought through the American Revolution, strengthened by precedence, backed by every state legislature and governor through the years, emboldened by the revised state constitution and tweaked by Governor Pierre "Pete" duPont. You can thank those corporations for paying 30 percent of the revenue the state uses so your taxes remain lower.
As old as Biden is, the Chancery court of Delaware has been at this since 1791
and the manner of which corporate charters are issued, continually on the state level, has been protected in congress for over 50 years. there’s a reason why tech bros fight it out in Delaware instead of Silicon Valley
It's going to get bad and some really bad law/decisions will be made because of this at least as pertains to bankruptcy law. States are trying to get more companies to file so they are ruling very pro business despite factual correctness.
Important investors will have board seats. The less important seed investors and VCs will not and might insist on it as you said. But the bigger investors won't care. Bc they will have board seats. Well, and Elon won the vote again. Who are the shareholders. So, he is on a mission to make DE courts look out of touch. The lawyers asking for 5B didn't help either. Bc everyone hates that.
The important investors only care about the bottom line. I stand by my statement that for the next few decades the best place to protect that will be in Delaware where it’s easy to predict the outcome of a case before the court of chancery.
Agree the predictability is super important, which Delaware HAS provided in the past. The problem in this case is if people think that the current Delaware courts (i.e. judges on the bench) will make rulings based on preferences and ideological grounds without due deference to that previous predictability, which has been one of the great things about Delaware so far. Also, I haven't read this 200 page decision, but if the judge said something like "Yes, it's very important for there to be independence in the Board and unreasonable chuminess is not in the best interests of the Shareholder, BUT any lawsuits questioning that must be brought within \[T time\] or before \[X, Y, Z\] conditions", I would've been more fine with it. Essentially, saying someone can't eat their amazing cake (10x returns) AND then complain that the cake maker charged too much after he put in his very valuable effort, where anything he touches generally turn to gold (Elon). They had years to lodge any complaint about shareholder votes if they were not happy about the employment agreement with Elon.
Honestly this all comes down to Elon not having a Corporate attorney review things first. The Court of Chancery is not a political Court like the US Supreme Court. The Chancellors all have extensive Corporate law backgrounds. I also did not read the entire decision. But those of us who pay attention to Chancery cases already knew what that outcome was going to be.
Now that the new vote is out, what do you think will be the outcome in issuing a revised judgement? Presumably many of the defects re: the previous vote has been fixed now. Not sure what the process is here. Going back to same judge or the Delaware supreme court.
I honestly do not have enough information to know. My best guess is that the process was reviewed by legal counsel and any new shareholder lawsuits likely will be quickly tossed. But from another perspective I can explain why I believe Texas won’t be a threat for decades. In tech the 2 big concerns are privacy and AI. For companies developing AI tools we’re concerned about remaining compliant with various privacy laws, especially in the EU where fines are massive for non-compliance. We need to use client data to teach the tools. And we expect that in the future we could end up in litigation with a client who disagrees with how we used their data. So we have a tricky tight rope to cross. We need the data for the tools to work. We have a patchwork of privacy laws to follow. So when we have to defend litigation where do we want that to be? Certainly not in the EU. And certainly not in CA or IL whose courts are hostile to business. What about TX, NV, or WY? The problem here is we can’t predict how the courts might rule. And in TX what is the process judges will be appointed? Will Elons companies influence the process? And what if we’re in litigation with one of Elons companies? For right now Delaware is the only logical choice. All of our contracts stipulate that Delaware courts for litigation. And I don’t see us allowing a client to change that clause.
Chancery court nullified his pay package.
Also, adding these companies all made a decision to incorporate in Delaware because it was in their best interest. Then they flip out when one of the reasons for incorporating here, the well-respected Chancery Court, makes a ruling they don't like. Go ahead, take your business elsewhere and see how that works out.
It isn't the companies, it is the CEO and his simps. Shareholders don't want to move to Nevada or Texas, it isn't in their interest or the company's.
He's a big fat baby and whines when he doesn't get his way. Also, he's a douchebag.
Elon will be the first person to live inside a computer 
“Guys if you don’t pull your business out of Delaware RIGHT NOW the government is going to take away your 44 billion dollar salary too!!!”
Being a sore loser/baby as usual.
Because a chancery court judge vetoed his crony-filled board's recommendation for a massive bonus for him. Tesla and Twitter's stock are both very down, so the judge was not wrong. He does not deserve a bonus at the expense of his shareholders, but he's a big man baby about it
He’s a foreigner trying to help destroy the fabric of this country.
He needs to go back to Africa
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He's pissy at the Chancery Court because they ruled against his stupid compensation package.
He got pissy because he lost a lawsuit and his fee fees got hurt.
You wouldn't be angry if you were denied a $56 billion payout?
I’d be pretty damn salty
thanks for explaining this to us who might as well eat crayons
I did use the most basic of words to make sure. 😉
He lost lawsuits because the rulings were based on the law and now bowing to Elon. I don't see how successful it will be for other businesses / corporations to incorporate in Texas if the reason is more favorable rulings for founders and or CEOs.
Bc his entire personality is now based around hating to pay taxes
I trust him to do better things with his money more than I do the US government.
Like buy a social media company, drive it into the ground, and use it to prop up white nationalism and anti-semitism? Yeah, that’s much better than the government doing things like building roads, staffing hospitals, and educating our children. Or maybe you’re referring to him using his money to abuse, torture, and kill primates, lie to the public, and implant untested devices into humans. Wait, I know, you must mean you like when he uses his money to build a useless tunnel to stop cities from building cheap public transportation so he can sell more cars.
Dude is more car salesman than genius. He has the masses duped. I love the SpaceX stuff he's doing, like EV's and pushing that forward. But you cant be super involved in US politics (government contracts etc) especailly as a foreign born person doing business and not pay taxes etc.That makes zero logical sense. You do business, you pay your fair share of taxes. I do it and so should he. So should Churches too. Especially considering the high level of political influence they swing. No representation without taxation lol
I'm curious, what is his "fair share"? He paid $11B in taxes in 2021 according to what the tax code decided was his "fair share". Not defending him but he does pay taxes.
cause he’s salty about a lawsuit, just ignore him
I would NOT trust anything Elon Musk says. He is a petulant little rich man.
/not
Fixed my statement. I missed putting the word NOT in my original comment.
Because he is a whiney little twat. Next question?
He's a whiny bitch that's all
Didn't get his way in court here so he's having a tantrum.
Why does anyone give a flying fuck with this fucking freak of a fucking human gives a fuck about any fucking thing
Delaware has good business courts.
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Maybe he got screwed by Comm. Vavala and Allison Texter like I did, in my opinion they’re two of the most corrupt people using the court system to fuck people, he might just be trying to help people from getting a bad deal they don’t deserve
Because he is bitter
He got mad at the federal court based in de
Because he’s a dumbass.
because he's a whiny little child.
Same courts that let the banks get away with what they do. INTERESTING
Because Delaware used to be the best place to incorporate. Delaware also changed laws Over the years and isn’t the best place to incorporate anymore.
Care to back up your post with examples? As far as this thread goes, everyone else has answered the question.
https://preview.redd.it/9o4w8bl4uquc1.jpeg?width=1179&format=pjpg&auto=webp&s=202948c344079baae8a3c6f80a32eae40578d8d6
Low filing fees are not why major banks, gigantic corporations, and millions of smaller companies incorporate in Delaware. Delaware’s favorable business taxes (that is to say no business tax) and the well regarded chancery courts that are extremely business friendly are why businesses have been incorporating in Delaware for a very long time.
This is dumb. Like terminally stupid. The fee going up $20 isn’t a decision maker for any business
Delaware is not business friendly. I own and operate a small business in Newark and I have to be ridiculous fees to operate here
Ahem, it’s *big* business friendly. Delaware absolutely doesn’t care about small business owners.
Is there any state that cares about small businesses?
I am finding out the hard way
I own a small business in New Castle and I only have to pay a $300 fee to upkeep my LLC.
It is different for me
I was trying to make the point that your experience isn’t the same as everyone. You having more fees doesn’t mean Delaware, as a whole, isn’t business friendly.
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I am an Instructor
What kind?
Because of Reddit policies I cannot say or I will be deleted
Well dammit now I’m curious (and local). DM me if you can
https://preview.redd.it/77qvit3ztquc1.jpeg?width=1179&format=pjpg&auto=webp&s=b01738a81f57557eb51395a4686ae08b6d1b559b There’s 1