seeing green

Global chemicals co. with Houston HQ to build industrial-scale recycling plant in Germany

LYB is building its first industrial-scale catalytic advanced recycling demonstration plant at its site in Germany. Photo via lyondellbasell.com

This month, LyondellBasell has announced it has officially pulled the trigger on a new recycling plant in Germany.

Dutch chemicals leader LYB, as the company has rebranded recently, has made its final investment decision to build its first industrial-scale catalytic advanced recycling demonstration plant at its site in Wesseling, Germany.

The project is reported to be the first "commercial scale, single-train advanced recycling plant to convert post-consumer plastic waste into feedstock for production of new plastic materials that can be ran at net zero GHG emissions," per LYB's news release.

The plant will utilize LYB's MoReTec technology, which targets difficult to recycle plastics like mixed or flexible materials, and have an annual capacity of 50,000 tonnes per year. The amount expected to be recycled annually will equal plastic packaging waste generated by over 1.2 million German citizens per year.

"We are committed to addressing the global challenge of plastic waste and advancing a circular economy, and today's announcement is another meaningful step in that direction," says Peter Vanacker, LYB CEO, in the release. "Scaling up our catalytic advanced recycling technology will allow us to return larger volumes of plastic waste back into the value chain. By doing this, we will have the ability to produce more materials for high-quality applications, retaining value of plastics for as long as possible."

The plant's construction is anticipated to be done by the end of 2025. The majority of the sorted processed feedstock will be supplied by Source One Plastics, a joint venture of LYB and 23 Oaks Investments that formed in October 2022.

A few weeks ago, LYB purchased a 25 percent stake in a joint venture that seeks to accelerate advancements in plastic recycling. The joint venture, Cyclyx International, was formed in 2020 by Spring-based energy giant ExxonMobil and Tigard, Oregon-based plastic recycling innovator Agilyx.

In 2022, Cyclyx announced it had inked a deal with ExxonMobil and LyondellBasell to develop a first-of-its-kind plastic waste sorting and processing plant in the Houston area. The estimated $100 million facility, set to open in 2024, is poised to annually produce 330 million pounds of plastic feedstock, which is made up of recycled materials that can be used to manufacture new plastics.

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A View From HETI

Lawyers for a Tesla shareholder who sued to block the pay package contended that shareholders who had voted for the 10-year plan in 2018 had been given misleading and incomplete information. Photo via cdn.britannica.com

For a second time, a Delaware judge has nullified a pay package that Tesla had awarded its CEO, Elon Musk, that once was valued at $56 billion.

Last week, Chancellor Kathaleen St. Jude McCormick turned aside a request from Musk's lawyers to reverse a ruling she announced in January that had thrown out the compensation plan. The judge ruled then that Musk effectively controlled Tesla's board and had engineered the outsize pay package during sham negotiations.

Lawyers for a Tesla shareholder who sued to block the pay package contended that shareholders who had voted for the 10-year plan in 2018 had been given misleading and incomplete information.

In their defense, Tesla's board members asserted that the shareholders who ratified the pay plan a second time in June had done so after receiving full disclosures, thereby curing all the problems the judge had cited in her January ruling. As a result, they argued, Musk deserved the pay package for having raised Tesla's market value by billions of dollars.

McCormick rejected that argument. In her 103-page opinion, she ruled that under Delaware law, Tesla's lawyers had no grounds to reverse her January ruling “based on evidence they created after trial.”

What will Musk and Tesla do now?

On Monday night, Tesla posted on X, the social media platform owned by Musk, that the company will appeal. The appeal would be filed with the Delaware Supreme Court, the only state appellate court Tesla can pursue. Experts say a ruling would likely come in less than a year.

“The ruling, if not overturned, means that judges and plaintiffs' lawyers run Delaware companies rather than their rightful owners — the shareholders,” Tesla argued.

Later, on X, Musk unleashed a blistering attack on the judge, asserting that McCormick is “a radical far left activist cosplaying as a judge.”

What do experts say about the case?

Legal authorities generally suggest that McCormick’s ruling was sound and followed the law. Charles Elson, founding director of the Weinberg Center for Corporate Governance at the University of Delaware, said that in his view, McCormick was right to rule that after Tesla lost its case in the original trial, it created improper new evidence by asking shareholders to ratify the pay package a second time.

Had she allowed such a claim, he said, it would cause a major shift in Delaware’s laws against conflicts of interest given the unusually close relationship between Musk and Tesla’s board.

“Delaware protects investors — that’s what she did,” said Elson, who has followed the court for more than three decades. “Just because you’re a ‘superstar CEO’ doesn’t put you in a separate category.”

Elson said he thinks investors would be reluctant to put money into Delaware companies if there were exceptions to the law for “special people.”

What will the Delaware Supreme Court do?

Elson said that in his opinion, the court is likely to uphold McCormick's ruling.

Can Tesla appeal to federal courts?

Experts say no. Rulings on state laws are normally left to state courts. Brian Dunn, program director for the Institute of Compensation Studies at Cornell University, said it's been his experience that Tesla has no choice but to stay in the Delaware courts for this compensation package.

Tesla has moved its legal headquarters to Texas. Does that matter?

The company could try to reconstitute the pay package and seek approval in Texas, where it may expect more friendlier judges. But Dunn, who has spent 40 years as an executive compensation consultant, said it's likely that some other shareholder would challenge the award in Texas because it's excessive compared with other CEOs' pay plans.

“If they just want to turn around and deliver him $56 billion, I can't believe somebody wouldn't want to litigate it,” Dunn said. “It's an unconscionable amount of money.”

Would a new pay package be even larger?

Almost certainly. Tesla stock is trading at 15 times the exercise price of stock options in the current package in Delaware, Morgan Stanley analyst Adam Jonas wrote in a note to investors. Tesla's share price has doubled in the past six months, Jonas wrote. At Monday’s closing stock price, the Musk package is now worth $101.4 billion, according to Equilar, an executive data firm.

And Musk has asked for a subsequent pay package that would give him 25 percent of Tesla's voting shares. Musk has said he is uncomfortable moving further into artificial intelligence with the company if he doesn't have 25 percent control. He currently holds about 13 percent of Tesla's outstanding shares.

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