Highlights of court ruling on Elon Musk, Tesla pay package

200-page bombshell verdict from Delaware court on Tuesday tesla The campaign to cancel CEO Elon Musk’s massive $56 billion compensation package features depictions of a lawyer holding back tears, references to Frankenstein, and spooky self-driving car puns.

And there’s an entire section about the planet Mars, and how Musk has a “moral obligation” to use his incredible wealth to help colonize Mars and “save humanity.” It is written about the belief that

The assets are set to be significantly reduced by a judgment handed down by Treasury Tribunal Chief Justice Kathleen McCormick, unless the appeal is successful.

Musk was frustrated that Tuesday, tweeting, “Never incorporate your company in Delaware.”

But McCormick seemed to enjoy writing about his decision.

The main points of the McCormick decision are as follows:

• “Was the world’s richest man overpaid? So says the shareholder plaintiff in this representative lawsuit, who says Tesla’s directors gave Elon Musk a performance-based stock compensation plan. It alleges that the company breached its fiduciary duty.
• “Ultimately, Mr. Musk initiated a self-driving process, re-adjusting speed and direction as he saw fit along the way. This process came at an unjust price, and through this lawsuit… , plaintiffs are requesting a recall.”
• “Musk is motivated by ambitious goals, the noblest of which is to save humanity. Musk believes that artificial intelligence will either reduce humanity to ‘the equivalent of pet cats’ or eliminate humanity altogether. Musk sees space colonization as a means to save humanity from this existential threat. We are trying to make life “multi-planetary.” Rational minds can debate the virtues and consequences of long-termist beliefs like Musk’s, but they have not been put to trial. The important thing here is that Mr. Musk holds these beliefs wholeheartedly. ”
• “Colonizing Mars is an expensive endeavor. Mr. Musk believes he has a moral obligation to direct his wealth toward that goal, and he sees compensation from Tesla as a means to finance that mission.” Musk believes that working for Tesla is only worthwhile if its research “generates additional economic resources that could be applied to making life multi-planetary. ”
• “Tesla and Musk are intertwined in an almost Mary Shelley (“You are my creator…”) kind of way. As Kimbal explained, “Tesla created the Elon Musk persona, and Elon Musk’s persona is tied to Tesla.” Mr. Musk is Tesla’s public face, and he calls Tesla “my company.” (Footnote: See generally Mary Shelley, Frankenstein, or the Modern Prometheus (Lackington, Hughes, Harding, Maver & Jones, 1st ed., 1818))

• “In addition to his 21.9% stock ownership, Mr. Musk is an exemplary ‘superstar CEO’, having held some of the most influential positions in the company (CEO, Chairman, Founder) and representing Tesla. “He enjoyed strong relationships with the directors he was tasked with negotiating with,” and dominated the process that led to board approval of his compensation plan. At least for this deal, Musk had control over Tesla. ”
• “Mr. Musk dictated the timing of the process, making last-minute changes to the schedule or changes to substantive terms at the last minute of six of the 10 board or compensation committee meetings at which the plan was discussed. .”
• “Defendants argued that the plan was an exceptional deal compared to private equity compensation plans, but there is no explanation as to why someone would compare a public company compensation plan to a private equity compensation plan. I didn’t.”
• “References [from a prior Delaware court ruling] The references to “supine servant” and “dominant master” are exaggerations, no doubt done intentionally to emphasize the difficulty of the standard. But here I was shocked. There is no greater evidence of Mr. Musk’s status as a deal-specific manager than the board’s attitude toward him in the lead-up to the grant. Simply put, neither his compensation committee nor the board of directors acted in the best interest of the company when negotiating Musk’s compensation plan. In fact, there is little evidence of negotiations. ”
• Todd: “Mr. Maron was completely beholden to Mr. Musk, lending credibility to the accuracy of the draft proxy statement. However, his relationship with Mr. Musk was such that Mr. Maron advised the board and compensation committee.” “Mr. Maron joined Tesla as a vice president,” he said. “He became an attorney in September 2013 and was promoted to general counsel in September 2014, reporting directly to Musk. Before joining Tesla, Maron served as Musk’s divorce attorney.
• “Although Maron did not interact with Musk or consider him a friend when he worked at Tesla, he owed his career to him and had a genuine affection for him,” the deposition said. But even in court, Maron fought back tears when asked about leaving Tesla.”Tesla said in January 2019 that it was the “hardest decision” he had ever made. ”
• “Defendants also argued that Mr. Musk needed additional incentives to remain at Tesla or spend more time at SpaceX, where he could establish interplanetary travel and colonize Mars. Another question: If it’s so important to push Mr. Musk to prioritize Tesla over other businesses, how much more money should Mr. Musk give to Tesla? Why not put guardrails around how much time and energy they had to spend?