Great observations Mr Carter! Sadly I think we need a game changing asshole like Trump to change the sad dynamic of this country. If he did nothing else his exposure of the entrenched bureaucracy known as the Deep State is worthy of praise. I don't care about his style but substantively he's been one of the better presidents we've ever had. Give me an asshole like Trump over any one of the corrupt mo-fo's in Washington any day! On both sides of the aisle!
I do not like the courts standing in for the shareholders and, by extension, the theoretical representatives of the shareholders, but Delaware Corporate law is designed to provide efficiency for the companies and fairness for minority shareholders.
That is a feature and not a bug of the Delaware Chancery Court.
In the Musk case the allegation -- proven at trial and in depositions -- was that Musk's employment agreement was not negotiated at arms length, was not properly disclosed to the shareholders before they voted for it, and was excessive.
1. Musk proposed the agreement rather than the compensation committee of the board.
2. The board of directors was composed of persons with a very close personal relationship with Musk -- his brother was on the board for goodness sake -- and those who reported to Musk and those who were beholding to Musk for having created once in a lifetime wealth.
There was essentially no board member who was solely an advocate for the shareholders and there was a majority of toadies including the guy's brother.
3. There was no real negotiation and the negotiation that did happen was simply wordsmithing. No push back at all. The board's role was reduced to scrivenering, rather than negotiating.
One of the critical reasons why the Chancellor voided the agreement was simply because of its formation and the lack of rigor in its negotiation.
The compensation committee of the board of directors did not play its appropriate role in the negotiation.
Once one gets over the manner in which the employment agreement came to life, there is the issue of its sheer magnitude. It was the largest CEO comp deal in the history of the US.
Musk's 2012 employment agreement, at its time, was also the biggest CEO comp deal in US history.
The guy has delivered tons of value to the shareholders, so I personally am not particularly fixated on the size, but it was bloody gargantuan. In fairness, Musk takes no salary.
All of this brings us to the issue of how the deal was communicated to the shareholders before they approved the deal.
The Chancellor found that the disclosures prior to the vote were inadequate and failed to describe the manner in which it, the employment agreement, was drawn and negotiated and the magnitude of shareholder dilution it created.
The Chancellor found that the shareholders did not have adequate information -- purposely -- to make an informed decision on the largest CEO comp deal in US history.
For those reasons, the Chancellor voided the agreement. Now, the board directors has two issues:
1. The board has to re-make itself so it isn't a bunch of Musk toadies.
2. The board has to make a new deal with Musk.
This is going to be hard task for the obvious reasons, but Musk has made it harder as he has recently demanded at least a 25% voting control (he currently has 13% because he sold a bunch of Tesla stock to fund his Twitter/X adventure).
As hard core a capitalist as I am, I would have to agree with the Chancellor in voiding the Musk agreement.
None of this trivia about Musk in any way impacts the nature of your commentary.
That's a helpful summary. Musk's challenge is that running a public company requires public company accountability compliance, while he appears to run it like a private company. IIRC, the SEC has had a couple "beefs" with him. While not expressing an opinion on the SEC in this regard, Musk has a history of pushing the envelope--not at all unusual in the business world.
And of course, Musk is running several ventures that are entrepreneurial, innovative, ground-breaking, growing rapidly, and are quite large enterprises. That's a very rare combination. SpaceX had how many launches in 2023? Tesla sold over a million vehicles last year. Twitter/X makes for a very high public profile--and must consume significant waking hours. I cannot think of anyone, in any field, coming close to being occupied with such efforts.
Needless, public companies should not be run as private fiefdoms.
I've known Thiel for around 25 years now. I think one of the keys to his presentations is that he doesn't really try to go hard at PowerPoint or any graphics. If he can present something with just two intersecting circles, then he does just that, making his point rather than making the graphic the important part of the presentation.
I agree with your assessment of Donald Trump and as you well know I am a big supporter of his. Anybody who could successfully navigate organized crime, politics, the unions, tenants organizations, and the general attitude of New Yorkers and succeed in that environment is a hell of a lot more accomplished than 95% of the theoreticians who are educated but ignorant in Washington DC.
I follow Marty Armstrong, he implies the end comes in 2029. That would mean the uniparty continues its purchase of votes until the money runs out.
"A democracy cannot exist as a permanent form of government.
It can only exist until the voters discover that they can vote themselves largesse from the public treasury.
From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship."
~Alexis de Tocqueville
The average age of the world's greatest civilizations has been 200 years.
I’ve been reading the good professor Instapundit’s blog since around 2000. I can say that much I’ve learned there has opened my mind and changed my life for the better. Never heard of this Cochrane fellow but I will be checking him. Oh and BTW, agree with pretty much everything in this post.
Texas is not crazy for trying to compete with Delaware. In the trust world Delaware also had a lock for a long time. But South Dakota, Nevada and a couple other states adopted trust friendly laws that made them appealing places to establish your dynastic trust or private trust company.
The result was some of the larger banks (particularly with South Dakota) then needed to locate people there for clients that might be interested in SD trusts. It’s a long slow process but making the initial effort and doing it in a thoughtful way (not a knee jerk reaction to a perceived opportunity) can yield results in the long run.
Well, it is interesting how the New York Times stock is near all time highs. Someone's subscribing to it. Anyone who wants their anti-Trump bubble signed, sealed and delivered, without any pokes at it, the Times must be irresistible!
My favorite story about Steve Jobs is about when someone asked why he never had any marketing data: People don't know what they want until you show it to them. A true original swashbuckler.
You know who is even less innovation focused than academics? Politicians. Just today DeSantis has come out against lab grown meat. Why is that? It seems certainly a good thing to try to do. He's pandering to some constituency. His attitude is about as useful as the anti-nuke people's.
Trump's one and only 'innovation' has been to associate his last name with prestige. All the way back to 'Lifestyles of the Rich and Famous'. Real estate, especially multifamily, has very little innovation. It's all about picking markets and sites.
Also, while Twitter is a fine place to find news, it's a horrible place to read it. Only a small percentage of people even use Twitter. The fall of the newspaper business really is lamentable. Everyone should read a local paper as an informed person. The best part of a paper was to read stuff you didn't know you were interested in. The old WSJ center column article was gfrequently a gem. The self-selection of what to read is a major cause of our crazy polarization. Everyone gets to find their own 'truth'.
Terrific post, Jeff. But I disagree about one point: Trump's next set of Cabinet selections (if there's a second time. He has tons of problems with independents & worse problems with women). Trump will undoubtedly- 100%- make a few terrible appointments. Just look at his ever-changing 3rd tier legal team as the most recent experience of bad picks. He can't help himself, he is seduced by ass-kissers.
Ben Carson, Rick Perry, Wilbur Ross, Mike Pompeo, Steve Mnuchin, Alex, Acosta, Nikki Haley, John Ratcliffe, Robert Lighthizer, Betsy Devos, Mick Mulvaney -- some of the best Cabinet officials in the history of the US. Most served longer than typical meaning he had a very stable Cabinet.
Rex Tillerson, Jim Mattis, Jeff Sessions, Scott Pruitt -- bad picks. These guys got all the media attention.
On the whole, Trump had a first rate Cabinet. All of the good ones were work horses. All the bad ones were show ponies.
To me, Jeff Sessions was the one who made the singular worst decision of any AG in my lifetime.
Great observations Mr Carter! Sadly I think we need a game changing asshole like Trump to change the sad dynamic of this country. If he did nothing else his exposure of the entrenched bureaucracy known as the Deep State is worthy of praise. I don't care about his style but substantively he's been one of the better presidents we've ever had. Give me an asshole like Trump over any one of the corrupt mo-fo's in Washington any day! On both sides of the aisle!
I do not like the courts standing in for the shareholders and, by extension, the theoretical representatives of the shareholders, but Delaware Corporate law is designed to provide efficiency for the companies and fairness for minority shareholders.
That is a feature and not a bug of the Delaware Chancery Court.
In the Musk case the allegation -- proven at trial and in depositions -- was that Musk's employment agreement was not negotiated at arms length, was not properly disclosed to the shareholders before they voted for it, and was excessive.
1. Musk proposed the agreement rather than the compensation committee of the board.
2. The board of directors was composed of persons with a very close personal relationship with Musk -- his brother was on the board for goodness sake -- and those who reported to Musk and those who were beholding to Musk for having created once in a lifetime wealth.
There was essentially no board member who was solely an advocate for the shareholders and there was a majority of toadies including the guy's brother.
3. There was no real negotiation and the negotiation that did happen was simply wordsmithing. No push back at all. The board's role was reduced to scrivenering, rather than negotiating.
One of the critical reasons why the Chancellor voided the agreement was simply because of its formation and the lack of rigor in its negotiation.
The compensation committee of the board of directors did not play its appropriate role in the negotiation.
Once one gets over the manner in which the employment agreement came to life, there is the issue of its sheer magnitude. It was the largest CEO comp deal in the history of the US.
Musk's 2012 employment agreement, at its time, was also the biggest CEO comp deal in US history.
The guy has delivered tons of value to the shareholders, so I personally am not particularly fixated on the size, but it was bloody gargantuan. In fairness, Musk takes no salary.
All of this brings us to the issue of how the deal was communicated to the shareholders before they approved the deal.
The Chancellor found that the disclosures prior to the vote were inadequate and failed to describe the manner in which it, the employment agreement, was drawn and negotiated and the magnitude of shareholder dilution it created.
The Chancellor found that the shareholders did not have adequate information -- purposely -- to make an informed decision on the largest CEO comp deal in US history.
For those reasons, the Chancellor voided the agreement. Now, the board directors has two issues:
1. The board has to re-make itself so it isn't a bunch of Musk toadies.
2. The board has to make a new deal with Musk.
This is going to be hard task for the obvious reasons, but Musk has made it harder as he has recently demanded at least a 25% voting control (he currently has 13% because he sold a bunch of Tesla stock to fund his Twitter/X adventure).
As hard core a capitalist as I am, I would have to agree with the Chancellor in voiding the Musk agreement.
None of this trivia about Musk in any way impacts the nature of your commentary.
JLM
www.themusingsofthebigredcar.com
That's a helpful summary. Musk's challenge is that running a public company requires public company accountability compliance, while he appears to run it like a private company. IIRC, the SEC has had a couple "beefs" with him. While not expressing an opinion on the SEC in this regard, Musk has a history of pushing the envelope--not at all unusual in the business world.
And of course, Musk is running several ventures that are entrepreneurial, innovative, ground-breaking, growing rapidly, and are quite large enterprises. That's a very rare combination. SpaceX had how many launches in 2023? Tesla sold over a million vehicles last year. Twitter/X makes for a very high public profile--and must consume significant waking hours. I cannot think of anyone, in any field, coming close to being occupied with such efforts.
Needless, public companies should not be run as private fiefdoms.
I've known Thiel for around 25 years now. I think one of the keys to his presentations is that he doesn't really try to go hard at PowerPoint or any graphics. If he can present something with just two intersecting circles, then he does just that, making his point rather than making the graphic the important part of the presentation.
Bughouse Square nails it.. kudos 👏
Those who fade Elon Musk tend to regret it 😄
I agree with your assessment of Donald Trump and as you well know I am a big supporter of his. Anybody who could successfully navigate organized crime, politics, the unions, tenants organizations, and the general attitude of New Yorkers and succeed in that environment is a hell of a lot more accomplished than 95% of the theoreticians who are educated but ignorant in Washington DC.
I follow Marty Armstrong, he implies the end comes in 2029. That would mean the uniparty continues its purchase of votes until the money runs out.
"A democracy cannot exist as a permanent form of government.
It can only exist until the voters discover that they can vote themselves largesse from the public treasury.
From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship."
~Alexis de Tocqueville
The average age of the world's greatest civilizations has been 200 years.
We're at 248.
I’ve been reading the good professor Instapundit’s blog since around 2000. I can say that much I’ve learned there has opened my mind and changed my life for the better. Never heard of this Cochrane fellow but I will be checking him. Oh and BTW, agree with pretty much everything in this post.
Texas is not crazy for trying to compete with Delaware. In the trust world Delaware also had a lock for a long time. But South Dakota, Nevada and a couple other states adopted trust friendly laws that made them appealing places to establish your dynastic trust or private trust company.
The result was some of the larger banks (particularly with South Dakota) then needed to locate people there for clients that might be interested in SD trusts. It’s a long slow process but making the initial effort and doing it in a thoughtful way (not a knee jerk reaction to a perceived opportunity) can yield results in the long run.
Well, it is interesting how the New York Times stock is near all time highs. Someone's subscribing to it. Anyone who wants their anti-Trump bubble signed, sealed and delivered, without any pokes at it, the Times must be irresistible!
My favorite story about Steve Jobs is about when someone asked why he never had any marketing data: People don't know what they want until you show it to them. A true original swashbuckler.
This is how messed up our country is, Musk gets in trouble for sleeping at his headquarters https://www.theguardian.com/technology/2022/dec/07/twitter-san-francisco-investigating-offices-converted-bedrooms, But homeless can sleep and relieve themselves on the street.
You know who is even less innovation focused than academics? Politicians. Just today DeSantis has come out against lab grown meat. Why is that? It seems certainly a good thing to try to do. He's pandering to some constituency. His attitude is about as useful as the anti-nuke people's.
Trump's one and only 'innovation' has been to associate his last name with prestige. All the way back to 'Lifestyles of the Rich and Famous'. Real estate, especially multifamily, has very little innovation. It's all about picking markets and sites.
Also, while Twitter is a fine place to find news, it's a horrible place to read it. Only a small percentage of people even use Twitter. The fall of the newspaper business really is lamentable. Everyone should read a local paper as an informed person. The best part of a paper was to read stuff you didn't know you were interested in. The old WSJ center column article was gfrequently a gem. The self-selection of what to read is a major cause of our crazy polarization. Everyone gets to find their own 'truth'.
Terrific post, Jeff. But I disagree about one point: Trump's next set of Cabinet selections (if there's a second time. He has tons of problems with independents & worse problems with women). Trump will undoubtedly- 100%- make a few terrible appointments. Just look at his ever-changing 3rd tier legal team as the most recent experience of bad picks. He can't help himself, he is seduced by ass-kissers.
Ben Carson, Rick Perry, Wilbur Ross, Mike Pompeo, Steve Mnuchin, Alex, Acosta, Nikki Haley, John Ratcliffe, Robert Lighthizer, Betsy Devos, Mick Mulvaney -- some of the best Cabinet officials in the history of the US. Most served longer than typical meaning he had a very stable Cabinet.
Rex Tillerson, Jim Mattis, Jeff Sessions, Scott Pruitt -- bad picks. These guys got all the media attention.
On the whole, Trump had a first rate Cabinet. All of the good ones were work horses. All the bad ones were show ponies.
To me, Jeff Sessions was the one who made the singular worst decision of any AG in my lifetime.
JLM
www.themusingsofthebigredcar.com