The Delaware Court of Chancery issued its latest opinion the Musk pay saga. Specifically, the Court rejected Musk’s argument that the stockholder vote “ratifying” his pay package was sufficient to overturn the Court’s earlier opinion ordering rescission. 1/ courts.delaware.gov/Opinions/Dow... - ThreadSky

andrewkinsey.bsky.social • 90 days ago

The Delaware Court of Chancery issued its latest opinion the Musk pay saga.

Specifically, the Court rejected Musk’s argument that the stockholder vote “ratifying” his pay package was sufficient to overturn the Court’s earlier opinion ordering rescission. 1/

https://courts.delaware.gov/Opinions/Download.aspx?id=372420

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andrewkinsey.bsky.social•90 days ago

More later, but wanted to flag a few things.

First, this opinion also addresses the fee request from plaintiff’s counsel. The lawyers asked for $5.6 billion. The Court granted them $345 million.

Second, the opinion is very long because it contains multiple independent reasons why Musk lost. 2/

andrewkinsey.bsky.social•90 days ago

Watch this thread, as I’ll try to write up more detail later today after I finish working on something that I have to get on file today.

Clients come first! 3/

andrewkinsey.bsky.social•89 days ago

Sorry for the delay - time to dig in.

First - some background. This is a case where a stockholder sued the Tesla board for breach of fiduciary duty regarding the $55.8 billion compensation package that they granted to Elon Musk. The comp plan was stock-based. /4

andrewkinsey.bsky.social•89 days ago

I won't get into the nitty-gritty of stock options, but the gist is that Musk has the ability to purchase several hundred million shares of Tesla at a steep discount to the trading price. As such, Musk would profit from every share purchased under the comp plan. /5

andrewkinsey.bsky.social•89 days ago

After trial, the Delaware Court of Chancery held that the stock plan was the product of breach of fiduciary duty and must be rescinded. If you want to read that opinion, you can do so here. It's 201 pages long, so grab a cup of coffee. /6

https://courts.delaware.gov/Opinions/Download.aspx?id=359340

andrewkinsey.bsky.social•89 days ago

Without diving into that opinion, I'll just note that the Court found that the comp plan failed entire fairness review. That's Delaware's highest level of review.

Now, a brief sidebar: As a general rule (some exceptions apply, please don't @ me) there are three levels of scrutiny in DE. /7

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