Elon Musk Tesla pay package court ruling highights

Delaware court’s blockbuster 200-page ruling on Tuesday Tesla A description of the cancellation of a massive $56 billion compensation package against Chief Executive Elon Musk included a description of a lawyer fighting back tears, a reference to “Frankenstein” and an embarrassing reference to self-driving cars. Pun.

Then there’s an entire section about Mars – the planet – and Musk’s belief that he has a “moral obligation” to use his incredible wealth to help colonize Mars to help “save humanity.”

Unless the appeal is successful, the ruling issued by Chancellor Kathhaleen McCormick will significantly reduce those fortunes.

Musk was not happy with what happened on Tuesday, tweeting: “Never register your company in Delaware.”

But McCormick seemed happy to write about her decision.

Here are the highlights of McCormick’s ruling:

• “Is the world’s richest man overpaid? So says the shareholder plaintiff in this derivative lawsuit. He claims that Tesla directors violated their terms by granting Elon Musk a performance-based equity compensation plan. Fiduciary Duty.”
• “The bottom line is that Musk initiated the self-driving process, readjusting the speed and direction he saw fit along the way. That process came at an unfair cost. And through this lawsuit, the plaintiffs are asking for a recall.”
• “Musk is motivated by ambitious goals, the most lofty of which is saving humanity. Musk fears that artificial intelligence could reduce humans to “the equivalent of house cats” or wipe them out entirely. Musk sees space colonization as a means to save humanity from this existential threat. Musk is trying to make life “multi-planetary” by colonizing Mars. Reasonable minds can debate the merits and consequences of long-termist beliefs like those held by Musk, but they are not put on trial. What is relevant here is that Musk sincerely holds these beliefs. “
• “Colonizing Mars is an expensive endeavor. Musk believes he has a moral obligation to use his wealth to achieve this goal, and Musk sees Tesla’s compensation as a means to fund the mission. Musk He argued that working at Tesla would be worth his time only if the following conditions were met: The work would generate ‘additional economic resources… that could be used to enable life on multiple planets.'”
• “Tesla and Musk are closely linked, almost intertwined in a Mary Shelley (‘You are my maker…’) way. As Kimbal explains, ‘Tesla created Elon Musk. Musk’s role, and Elon Musk’s role is closely tied to Tesla.’ Musk is Tesla’s public face, describing Tesla as “my company.” (Footnote: See generally Mary Shelley, Frankenstein; or The Modern Prometheus (Lackington, Hughes, Harding, Mavor & Jones, 1st ed. 1818)”

• “In addition to owning 21.9% of the stock, Musk is also the quintessential ‘superstar CEO’, holding some of the most influential corporate positions (CEO, chairman, founder) and responsible for negotiating on behalf of Tesla. ’s directors have close ties to Tesla, and led the process of the board approving his compensation plan. At least as far as this deal is concerned, Musk controls Tesla.”
• “Musk dictated the timing of the process, making last-minute changes to the timeline or changing substantive terms before six of the ten board or compensation committee meetings to discuss the plan.”
• “Defendants maintain that the plan is a special transaction as compared to a private equity compensation plan, but they do not explain why someone would compare a public company’s compensation plan to a private equity compensation plan.”
• “The reference (from a previous Delaware court decision) to ‘passive servants’ and ‘arrogant masters’ is an exaggeration, no doubt intended so to emphasize the difficulty of the standard. But it hits home here. No. It doesn’t get much greater than that.” Evidence of Musk’s status as a specific controller of the deal was more important than the board’s attitude toward Musk during the process of obtaining the grant. In short, neither the compensation committee nor the board had the company’s best interests at heart when negotiating Musk’s compensation plan. In fact, there is little evidence of any negotiations. “
• Todd Malone was fully beholden to Musk, which lends credence to the accuracy of the draft proxy statement. But his relationship with Musk raises concerns about other aspects of the process by which Malone provides advice to the board and compensation committee . Malone joined Tesla as deputy general manager in September 2013 as legal counsel, and was promoted to general counsel in September 2014, reporting directly to Musk. Before joining Tesla, Malone was Musk’s divorce lawyer.
• “Malon neither dated Musk nor considered himself a friend of Musk while working at Tesla, but he owes his career to Musk and has genuine affection for Musk. Both in his During testimony and at trial, Malone held back tears when asked about his departure from Tesla. In January 2019, Tesla described it as the ‘most difficult decision’ he had made to date. ‘.”
• “The defendants also argued that Musk needed additional incentives to stay at Tesla, otherwise he would have spent more time at SpaceX, where he could pursue his galactic ambitions of establishing interstellar travel and colonizing Mars while potentially earning More money. This argument makes sense. Another question: If it’s so important to encourage Musk to prioritize Tesla over other ventures, why not limit how much time or energy Musk has to invest in Tesla? ?”