3 ms·

This will be the end of incorporating in Delaware if this ruling is allowed to stand.

breadwinner 2y ago
Not really. Elon Musk's case is outlandish. Who gets paid $101 billion pay package? Should the pay package of Tesla CEO be equal to the market caps of Ford and GM combined? It is crazy to suggest that. For comparison Tim Cook is paid around $63 million per year, and Satya Nadella is paid $79 million.
- s1artibartfast 2y ago
  I think that should be between the shareholders and Musk.
  - breadwinner 2y ago
    Shareholders were not properly informed, so one of them sued.
    - s1artibartfast 2y ago
      yes, I understand that. I am speaking about this appeal that the article discusses. The shareholders voted that they wanted to give him the money anyways and the judge said they cant do that. >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.
      - aw1621107 2y ago
        Somewhat tangential, but this bit caught my eye: > 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_wXxfW2wy_M/v0 https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/r_wXxfW2...
      - croes 2y ago
        If he slaps every shareholder in the face and the majority agree, that doesn't mean the rest can't press charges for assault. 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.
        s1artibartfast 2y ago
        I agree that the legal issue appears to turn on limits of majority shareholder consent. 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.
        croes 2y ago
        A threat isn’t quid pro quo. Otherwise the Mafia would just be a bunch of negotiators.
        s1artibartfast 2y ago
        Sure treats are. I can threaten to quit my job and I can threaten to withdraw any service or technology I own. 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
        croes 2y ago
        Neither AI nor the robots are Musk's so threatening to deliberately harm the company isn't legal.
      - Zigurd 2y ago
        That supposedly better informed second vote did not undo what was defective about the first vote to award such a huge bonus. 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.
        aw1621107 2y ago
        IIRC another complicating factor is that "here's a bunch of money/shares with no consideration" is likely to be considered a gift and previous cases have held that gifts require (near-?)unanimous shareholder approval. I think there have been some rumblings about loosening this standard in recent years, though I'm unsure where exactly that stands at the moment.
- hnburnsy 2y ago
  I think this will be quite the enticement for lawyers to sue companies incorporated in Delaware... >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
bdjsiqoocwk 2y ago
[dead]
Zigurd 2y ago
No. Most minority investors want fast efficient and informed court processes for disputes. There are already more permissive places to incorporate, like Nevada. But incorporating in Delaware confers a premium in valuation because less sketchy stuff goes on in Delaware.

Not really. Elon Musk's case is outlandish. Who gets paid $101 billion pay package? Should the pay package of Tesla CEO be equal to the market caps of Ford and GM combined? It is crazy to suggest that. For comparison Tim Cook is paid around $63 million per year, and Satya Nadella is paid $79 million.

s1artibartfast 2y ago
I think that should be between the shareholders and Musk.
- breadwinner 2y ago
  Shareholders were not properly informed, so one of them sued.
  - s1artibartfast 2y ago
    yes, I understand that. I am speaking about this appeal that the article discusses. The shareholders voted that they wanted to give him the money anyways and the judge said they cant do that. >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.
    - aw1621107 2y ago
      Somewhat tangential, but this bit caught my eye: > 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_wXxfW2wy_M/v0 https://assets.bwbx.io/documents/users/iqjWHBFdfxIU/r_wXxfW2...
    - croes 2y ago
      If he slaps every shareholder in the face and the majority agree, that doesn't mean the rest can't press charges for assault. 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.
      - s1artibartfast 2y ago
        I agree that the legal issue appears to turn on limits of majority shareholder consent. 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.
        croes 2y ago
        A threat isn’t quid pro quo. Otherwise the Mafia would just be a bunch of negotiators.
        s1artibartfast 2y ago
        Sure treats are. I can threaten to quit my job and I can threaten to withdraw any service or technology I own. 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
        croes 2y ago
        Neither AI nor the robots are Musk's so threatening to deliberately harm the company isn't legal.
    - Zigurd 2y ago
      That supposedly better informed second vote did not undo what was defective about the first vote to award such a huge bonus. 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.
      - aw1621107 2y ago
        IIRC another complicating factor is that "here's a bunch of money/shares with no consideration" is likely to be considered a gift and previous cases have held that gifts require (near-?)unanimous shareholder approval. I think there have been some rumblings about loosening this standard in recent years, though I'm unsure where exactly that stands at the moment.
hnburnsy 2y ago
I think this will be quite the enticement for lawyers to sue companies incorporated in Delaware... >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

bdjsiqoocwk 2y ago

[dead]

Zigurd 2y ago

No. Most minority investors want fast efficient and informed court processes for disputes. There are already more permissive places to incorporate, like Nevada. But incorporating in Delaware confers a premium in valuation because less sketchy stuff goes on in Delaware.