Hacker News Reader

Comment by gitfan86 | Hacker News Reader

Im not suggesting that all rules should be removed. I'm suggesting that if the laws and rules exist to protect shareholders, the courts should take shareholders' expectations into account. None of us who owned TSLA in 2018 looked at the board of directors, which included Musk's brother, and assumed it was a totally independent board, regardless of disclosures.

I sold some of those TSLA shares and moved them into NVDA last year and I have zero expectation that the NVDA BoD is 100% free of undisclosed conflicts of interest.

If the Delaware court system does not care about my expectations, fine, but they shouldn't claim to be helping me.

View on HN

> None of us who owned TSLA in 2018 looked at the board of directors, which included Musk's brother, and assumed it was a totally independent board, regardless of disclosures.

At least one person assumed it was independent, and that person sued. But if everyone knew about how conflicted the board is, how come the proxy went to such great lengths to refer to the board as "independent"?

  The Proxy failed to disclose any of the Compensation Committee members’ actual or potential conflicts with respect to Musk.747 In fact, the Proxy repeatedly described the members of the Compensation Committee as independent, stating: “The[] [Grant] discussions first took place among the members of the Compensation Committee . . . all of whom are independent directors;”748 and “[t]he independent members of the Board, led by the members of the Compensation Committee, spent more than six months designing [the Grant].”749 The Proxy’s introductory letter is “[f]rom the Independent Members of Tesla’s Board of Directors,” and the first four signatories are Compensation Committee members Gracias, Ehrenpreis, Denholm, and Buss.750 Notably, Gracias signed as “Lead Independent Director.”751 

  The description of the Compensation Committee members as “independent” was decidedly untrue as to Gracias and proved untrue as to the remaining committee members. At a minimum, Musk’s relationships with Ehrenpreis and Gracias gave rise to potential conflicts that should have been disclosed.752 Ultimately, all of the directors acted under a controlled mindset, calling into question the disclosure as to each of them.

  Overall, Defendants failed to prove that the information about conflicts was adequately disclosed. The Proxy was materially deficient on this point.

The judge thinks the reason they did this was to fool people.

> I have zero expectation that the NVDA BoD is 100% free of undisclosed conflicts of interest.

It's not about mere "undisclosed conflicts", it's that the compensation committee was so conflicted that it was effectively controlled by Musk.

I find it ironic that you assume the person who owned 9 shares brought the suit actually felt harmed by the inappropriate use of the word independent and doesn't have some other undisclosed interest in regards to filing suit.

> the person who owned 9 shares brought the suit actually felt harmed

That's the rule of law for you! Nine shares have as many fundamental rights as nine billion.

This is why the cost of capital for Delaware companies is lower than others'; it rules out entire categories of screwing around. Here's the good news: nobody is saying Musk can't get $55bn. It's saying he can't get it while pretending he isn't a controlling shareholder. The best thing to do might not be appealing, but putting the package to a new vote and moving on.

I don't assume anything, the plaintiff argued exactly this in court and the judge found in their favor. If there's a suspicion that this person has some other undisclosed interest then that can be argued in court.

Reply on news.ycombinator.com