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Elon Musk has become a trillionaire. However, while he reaps the rewards of SpaceX’s latest IPO, his ex-partners barely seem to have gained from it. The main reason for this is Elon’s strict rule against giving up equity to his partners. So, as the SpaceX CEO celebrates his newfound success, let’s take a quick look at why he made this decision.
Elon Musk rejected his first wife, Justine Musk’s request for equity
Elon Musk shared a long relationship with his first wife, Justine Musk. However, when it came to equity, even the mother of his six children was written off from the list. Elon filed for divorce from Justine in 2008, shortly before becoming the CEO of Tesla and entering the Forbes billionaires list with an estimated net worth of USD 2 billion.
Nonetheless, when Justine requested their house, child support, USD 6 million, a glacier-blue Tesla Roadster, 10 per cent of Tesla shares, and 5 per cent of SpaceX shares, Elon refused to offer her equity. According to reports, Elon had offered her 80 million before taxes, which she rejected in favour of equity stakes in Tesla and SpaceX, both still early-stage assets. She ultimately received neither an equity stake nor the value of Elon’s original cash offer.
Also Read: Who Will Get Elon Musk’s USD 1.1 Trillion Wealth? He Says Passing It To His Kids Will Be A ‘Mistake’
Why did this happen?
A key reason for this was the post-nuptial agreement signed in March 2000. Justine later wrote in Marie Claire that she had believed her marriage would last, and she had trusted her husband with the legalities. Justine had signed away her rights to community property, except their house, which would be transferred to her after the birth of a child.
Justine tried to challenge the post-nuptial agreement in court, arguing that Elon had kept the merger of X.com and Confinity, which later became PayPal and was sold to eBay for USD 1.5 billion in stock, with Elon reportedly earning at least USD 100 million. However, the ruling came in Elon’s favour, and Justine ended up with USD 20 million after taxes, including half the value of their Bel Air home and monthly payments for personal and household expenses.