Explaining the Elon Musk/Delaware conflict.

Elon Musk Elon Musk people have called you the real Tony Stark man who made electric cars a thing uh why do you laugh the real IDE is just took a jawdropping financial hit the Delaware judge yesterday voided pay package that was awarded by the Tesla board back in 2018 it was the largest Compensation Plan ever Tesla Shares are down significantly I want to start this video by telling you an insane story about Elon Musk the story is so crazy that for someone like me sitting on the outside I live in India it just sounds like the American legal and business system has lost their godamn mind and

Elon Musk put out a tweet saying never incorporate your company in the state of Delaware and he said it regarding this story so here's what happened an investor named Richard tornetta sued musk claiming that musk's pay package was unfair tornetta only owned nine Tesla shares and he was able to void a pay package for Elon Musk that was backed by more than 80% of the votes cast by Tesla shareholders back in 2018 Tesla was still a growing company it was valued about $50 billion and nowh close to how big it is today and he told them listen I'm going to take this company 10x from here and he said if I hit these targets I want a particular package which is 6% of the company stock so at that time the board agreed and said well this is a very hard Target in the first place and we get rich if you hit the target so fine we'll give you this package now 6 years later a judge has a problem with that package because Elon actually hit those targets and it is voided Tesla's board has argued in court filings that the pay package was needed to align musk's incentives with shareholders to keep him motivated because he is continuously diluting the company and diluted a lot of the company when they went public and keeping focused on the company's effort to ramp up the next model's production it was argued that musk did not receive any other compensation other than stock options and if Tesla had not hit Targets in the pay package musk would have received Zero from this which means he would not have received any money from the package at all the way the deal was structured was that they awarded must 1% of Tesla's Equity each time the company achieved one of its targets so the total amount that Elon stood to gain was $56 billion if we hit those goals and as of today those goals have been met and yes shareholders have made more than 10x their money During the period now a lot of people are arguing that the board kind of failed their duty but they did their Duty was to increase the value of Tesla's stock they've made it 10x even discounting musk's reward not only did musk hit the target for the market cap he also company's profitability he hit all Target set by the Tesla board by 2023 and what ended up happening one guy with just nine shares of the company sued him in court saying the package was too large in fact the judge who finally made that decision judge Kathleen mccomic said the amount was unfathomable and led to the point that it was too much for one person to have she even said that the board might be friends with Elon so there might have been back room dealing now I'm a big believer that if a company and their board decides something and it's been favorable to all the shareholders it's only fair to give that person the compensation and it's very weird for a person with nine shares to go to court and have the entire pay package revoked after Tesla has hit those targets and the main reason seems to be a lot of these people who believe it's too much money for one person to have but that's not where the story ends that's not the part that I find extremely crazy what I find extremely

crazy is that this week the lawyers who won this deal the lawyers who represented the person with nine shares revealed their price for their services $6 billion their argument was that the lawsuit is fairly large and thus they should be approp L compensated the number comes up to roughly $288,000 per hour of that time standard lawyers in the US charge1 to $150 an hour by the way but these lawyers said hey we deserve a percentage of the deal because the deal was large according to a report Delaware judges have said that pursuing cases deep into litigation through depositions and toward trial should get a higher percentage of the recovery to reflect the risk and effort the must pay case went on to a onewe trial it's ironic because this pay for judges was many more times than what standard judges would asked for and their statement was this was more risk and more effort which is exactly what mus said when setting his package with the board what's worse is that they want the $6 billion in Tesla shares not cash so they want about 29 million shares of the company so hang on let me as an Indian far away from the American business legal system get this straight the lawyers want a fee based on how large the settlement is but a CEO's performance bonus can't be based on how large he makes the company especially when the second one which is the CEO actually building a company from 50 billion to 600 plus billion takes several years and lots of Blood Sweat and effort when the trial on the other hand lasted a week as someone on the outside this all seems like highway robbery and I thought hey at least people get this people are looking at this and saying this is unfair so I went

to Reddit which in the past has been the voice of reason and they have lost it so it's not exactly some crazy Fringe subreddit that has no sense this is r/ technology hear this up out I like the part where he pointed out that this was like 30 times the record previous CEO compensation package also held by musk at like $2 billion it was ridiculously out of back with what any other CEO was SL is making followed by a reply called Elon we need to tax billionaires into Extinction in fact there were a lot of people complaining that Elon is a CEO of multiple companies and one person replied saying so what's stopping you go prove it and that person got downvoted pretty harshly then there was the statement called are there any billionaires who aren't horrible people and somebody else saying being a billionaire is a character flaw followed by I think holding a billion dollars inherently makes you a shitty person I

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that it would be easy to 10x Tesla but as you know Apple has spent over 10 billion dollars and fail to produce an electric vehicle it's not as easy as people think it is even if you already have an electric vehicle scaling that with so much competition from mainstream car makers is not trivial so over the last few months I've been noticing that I've been gaining an international audience some of you are from America and from the outside I just see you letting the worst of your nation take advantage of the best of your nation you are allowing rent Seekers and complainers to run wild and giving them all the validation and Court wins they need downvoting the people who make rational sense see to become a billionaire without inheritance you need to actually create over a billion dollars worth of value which is actually very hard to do most people who complain about Jeff Bezos for example still buy from Amazon he's created so much convenience and value for them and also created so much shareholder value and also so many jobs so many livelihoods actually depend on Jeff easily more jobs than many of the people complaining about him there's actually a very important diagram that I once saw it actually talks about who you need to be upset with being upset with just billionaires doesn't make sense in fact the right way to slice is a little bit different instead of just saying the enemy is rich people and non-rich people are good instead you should look at the rich and non-rich people little differently there are good rich people who are entrepreneurs earners protectors who actually create new technology and jobs in the process of what they do and on the other hand you have people like Predators cronies and rent Seekers people like the landlords or people like the lawyers in this case that are going after somebody with the money and then saying hey you've built the thing but we want to take a piece of it from you in all regards the enemy truly is rent Seekers because guess what especially in this case if the lawyers actually go out and make $6 billion they are also billionaires and they made it without putting in 10 years and making electric vehicles mainstream and if you say rich people are bad billionaires is a very arbitrary line to draw because most of the people doing the ruling and the judges also here are actually most likely multi-millionaires if you compare the amount of money a millionaire in America has with the average salary of some blueco collar workers in India you will realize that the million dollars really eclipses what many of these people have so for a millionaire judge to say XYZ is too much money I can guarantee you there are a lot of workers in India and the Philippines who are looking at millionaires there and saying wow that's too much money for you to have because what the judge is saying is that it's too much relative to what she has or what she has seen but at the same time what she has is too much relative to what several Indians have and this behavior of the rent seekers in America using public sentiment to get angry with Builders and saying these are billionaires these are bad people they just happen to be very public billionaires right a lot of the rent Seekers are more private therefore they get none of this lashback it is leading

to a rapid decline in America especially in Corporate America was always thought of as ahead of China it was the land of dreams it was thought of that China was a crazy authoritarian country where Investments weren't safe because the government could take it all away well that's exactly what's happened in Delaware No in fact my brother went to Silicon Valley recently and we've all heard of the homeless scenario and how nobody in America is doing anything about it sitting in India we thought that's definitely exaggerated there's no way that happens we see a few tweets about it but it's definitely not real and the first thing he saw which he happened to take a video of was one of these instances

by screwing your country's Builder and enabling crazy behavior and rent Seekers you are allowing other countries to get ahead in the global race the Chinese car maker byd was the laughing stock of the industry many years ago but now there a serious company that actually makes good electric vehicles bide sales have grown by about a million cars in the last 2 years according to New York Times the last automaker to accomplish that in one year in the American Market was General Motors and that was in 1946 even Elon is worried he warned of the strength of Chinese electric car manufacturers on a call saying frankly I think if there are not trade barriers established they will pretty much demolish most other companies in the world even India's up its game the upcoming Mahindra B Electric series looks really good and they've already had some progress with the SUVs see if you study history you will realize that most progress is made where your best Builders are protected from nonsense like rent Seekers because Global competition is a real thing and you can get into these internal battles get distracted and die and that actually leads to a Countrywide decline all those people complaining on Reddit will suddenly see Society declining because jobs start declining a lot more homeless people start showing up because American manufacturing superiority starts declining politicians in order to please many of these people who are now Angry with the billionaires start making more policy and rules to start giving out stimulus checks and less on enabling Builders without Builders you have less job jobs taking the electric vehicle example if America starts importing more cars from China and India and Tesla can't sell enough cars to support as many factories you are in trouble competition now is truly Global just see the mobile phone market Chinese smartphone makers have captured around 40% of the global market share at this point combine all of this with the attempt to convert America from a country that supports Merit hard work and skill with performative inclusivity and diversity and by the way I do think being inclusive which is giving everyone the opportunity to land the same job regardless of race of color are very important but performative inclusivity is when you try to keep your team 30% male 30% female and 30% non-binary or 10% of each race just to look good in public because just to show people that you're diverse and inclusive you start fabricating the truth and no customer wants that and finally for

everyone outside of the United States for Hungry ambitious people in India and Latin America and all over the world this is your opportunity the Empire is in chaos as long as you don't make the same mistakes and sacrifice your Builders just to appease the public the opportunity against a country losing its grip is immense that's it for my time

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