Musk loses $55 billion, but Tesla is in a stronger position

Musk loses $55 billion, but Tesla is in a stronger position

Musk loses $55 billion, but Tesla is in a stronger position

The entrepreneur has hinted that he may take his finest ideas for artificial intelligence elsewhere if he doesn't get another massive block of Tesla shares. The $55 billion pay package was struck down by a US court; thus, the Tesla board has to devise a new plan to keep Musk from moving his finest ideas to other companies.

Elon Musk sold some of his Tesla holdings in order to purchase the social media site, which is why he now wants additional shares.

The Delaware Court of Chancery is seen by Elon Musk as a massive anti-ATM that is draining his bank account. Tesla Inc.'s 2018 CEO salary package of $55 billion was revoked by Chancellor Kathleen St. J. McCormick late on Tuesday night. The same judge oversaw the case in 2022 whereby Twitter Inc. finally coerced Musk to submit to its takeover. The business withdrew before the trial started. Till recently, Twitter—now known as X—has not been a standout performer.

Musk rushed to the stage after the ruling to caution any doubting business owners, saying, "Never incorporate your company in the state of Delaware."

His tweeting patterns imply that this most recent setback is not entirely unexpected. A few weeks before, he had threatened to take his greatest ideas for artificial intelligence elsewhere if he didn't get another massive block of Tesla shares, which he said would be easy for employees to pilfer and seize control of. Can't. here was redundant on at least two levels: first, his role as CEO and lead marketer (see here) and second, the value of his personal Tesla stock is conditioned on those AI ambitions. However, it did seem to be a little anxious about the impending choice.

He now no longer has access to around $51 billion worth of Tesla stock options due to that ruling, which is appealable. As of last March, over 58% of his 12.9 percent direct interest in the business—worth $79 billion at the current share price—was pledged as security for personal debts. In addition, he has significant shares in other companies, such Space Exploration Technologies Corp., or SpaceX. It may be difficult for him to lose his top status in the worldwide wealth rankings, but he can still purchase the plane.

More significantly, Tesla's governance tragedy and contradiction are once again evident.

Anyone who has followed Tesla for a long time won't be too surprised by the judge's decision that the board had acted inconsistently in giving Musk the enormous pay package. Musk's brother is the longest-serving member of the company's board, which has long been something of a running parody of boards. This has overseen several of Musk's tantrums and dubious business decisions, not the least of which was the purchase of SolarCity Corp., to which Musk owed money, and the alleged take-private agreement that was often followed by the flimsy term "funding secured."

The board, which still has a few members from 2018, will presumably need to devise a new plan in order to stop Musk from taking his greatest ideas elsewhere. Everything seems very, well, Tesla-ish.

Musk's pursuit of further shares follows his sale of a part of his Tesla assets to fund the purchase of a social networking platform. This move detracts even more from Musk's primary occupation as an electric car entrepreneur and may be different given the added benefit of In form. people who choose to purchase such EVs. Check at the drop in shares that accompanied his almost $40 billion sell-off of his Tesla investment between late 2021 and early 2022. This most recent move is likely to cause investors to wonder how his personal finances will affect the company moving forward. may have an impact.

All of this occurs at a time when the company is vulnerable. Following Musk's directives, Tesla decided to launch the Cybertruck instead of pursuing its growth ambitions for the main car industry while it works on creating a new mass-market electric vehicle. This is only more extensive.

Given Musk's pivotal role in the Tesla enigma, it is possible—and likely—to allow such absurdities. It's difficult to think that Tesla would be valued anything close to $600 billion without him; he is both the primary asset and the primary danger. That fact could be a significant shortcoming of the board.