Elon Musk's multibillion-dollar Tesla pay package blocked by a judge again
cnn.com
cnn.com
>The judge additionally ruled on the award for the Tesla shareholder who brought the original suit, calling their request for $5.6 billion in legal fees “a bold ask” in a case about excessively high executive compensation. McCormick said the plaintiff, a Tesla shareholder named Richard Tornetta, was entitled to $345 million in either cash or Tesla shares
>Musk’s attorneys attempted to reverse McCormick’s January decision after the 2018 pay package was re-approved by 84% of shares not held by Musk or his brother, Kimbal Musk, in June.
But on Monday, that motion was denied. McCormick said that although the package was once again ratified by a majority of shareholders, that didn’t mean Musk’s record-breaking payday was in shareholders’ best interests.
> But on Monday, that motion was denied. McCormick said that although the package was once again ratified by a majority of shareholders, that didn’t mean Musk’s record-breaking payday was in shareholders’ best interests.
I'm not sure this is a particularly great description of the decision on the part of the linked article since I don't think that part of the decision rested at all on whether the compensation package was "in shareholders' best interests. From the decision [0],
> There are at least four fatal flaws [with the ratification argument]. First, the defendants have no procedural ground for flipping the outcome of an adverse post-trial decision based on evidence they created after trial. Second, common-law ratification is an affirmative defense that must be timely raised, which means that, at a minimum, it cannot be raised for the first time after the post-trial opinion. Third, what the defendants call “common law ratification” has no basis in the common law—a stockholder vote standing alone cannot ratify a conflicted-controller transaction. Fourth, even if a stockholder vote could have a ratifying effect, it could not do so here due to multiple, material misstatements in the proxy statement. Each of these defects standing alone defeats the motion to revise.
[0]: https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/r_wXxfW2...
Don't forget his threats to remove AI and robotics from Tesla if the don't give him what he wants. That's not a free decision.
I dont particularly agree with the free decision part. There is no such thing as a free decision, nor is it desirable. Quid pro quo is expected in contract law and the legal doctrine of consideration holds that a contract is not legally binding unless there is something of value exchanged between the parties.
Otherwise the Mafia would just be a bunch of negotiators.
The difference between the Mafia and a banker is not the threats, but their criminal nature.
Threatening to take your ball and go home is legal. Threatening to legally compete and ruin someone is legal. Threatening to kill someone and destroy their private property is illegal
Had there been another bonus agreement that simply said "Give Elon this many shares now" that would not even have required going back to the Delaware court.
I suspect they did not do that because it would have brought more scrutiny to a lapdog board.