Pablo PardoWashington Correspondent

Washington Correspondent

Updated Wednesday, January 31, 2024-02:57

  • Social Networks Musk gives up and says he will buy Twitter for the originally agreed price

  • Companies The liquidity problems of X (formerly Twitter) threaten Elon Musk's empire

This is corporate governance and the rule of law: an investor named

Richard Tornetta,

with only nine shares of Tesla, has defeated that company's largest shareholder,

Elon Musk,

who has 13% of the company, and his board of directors. in full. The result is a loss for Musk - the richest man in the world, although he says that the Russian dictator,

Vladimir Putin,

is richer - of 55.8 billion dollars

(about 51.4 billion euros).

Those $55.8 billion is the maximum value of the variable remuneration plan for objectives that the company's board of directors granted to Musk in 2018. Immediately afterwards, Tornetta took Tesla to the commercial courts of the state of Delaware, which in practice It is a tax haven which is why a large part of the American companies, including Musk's, have their headquarters there. Last night, Judge

Kathaleen McCormick

of that state's commercial court ruled that the plan is illegal, since Musk controlled Tesla's board of directors and governing bodies at the time the plan was approved. The commercial court (Court of Chancery) is a very special legal creature, given that

it has no way of enforcing the application of its rulings, despite which these, which are unappealable, have never been breached.

Musk has reacted with a tweet on his social network

Musk's compensation plan was based on twelve objectives, each of which would provide the manager with 1% of the company's capital.

Musk fulfilled the last one in 2022,

but for the moment he has not exercised his right to purchase. It was the largest compensation plan for a publicly traded company in history.

McCormick has completely agreed with Tornetta,

considering that Musk controlled Tesla's governing bodies.

For example, the company's top legal officer had also been his lawyer in all three of his divorces, and among the members of the board of directors who approved the compensation plan was his brother,

Kimbal

. The judge has also rejected the defense thesis that, if he did not obtain that package of stock options, Musk would leave the company.

Musk has had a bad experience in the past at the McCormick courthouse. It was in October 2022, when faced with the legal artillery presented by the owners of Twitter, he had no choice but to surrender and

agree to buy that company

for the price of 44,000 million dollars (40,570 million euros) that he had offered five months before. for the social network. On that occasion, the Tesla and SpaceX manager withdrew from the case before the oral hearing began, since he had no chance of winning. Since then, Twitter - now renamed X - has lost 71% of its value, according to estimates by Fidelity, one of the funds that participates in the company. Musk had better luck in Delaware when the Court approved the purchase of the solar panel company SolarCity by Tesla in 2016, in what was in practice a 'rescue' of the former by the latter. Kimbal was the head of SolarCity.

Tesla shares fell 3.6% in the futures market after the court decision was announced. So far this year, the company has lost around 25% of its market capitalization, although Musk remains the richest man in the world, according to the Bloomberg news agency. The manager wants to increase his participation in the capital from 13% to 25%, although it is not clear where he will get the more than 70,000 million necessary for this, given that practically all of his fortune is in shares of the companies he directs and his Liquidity is comparatively low for its immense wealth.