Delaware
Elon Musk cannot keep Tesla pay package worth more than $55 billion, Delaware judge rules
In trial testimony in November 2022, Musk denied that he dictated terms of the compensation package or attended any meetings at which the plan was discussed by the board, its compensation committee, or a working group that helped develop it.
McCormick determined, however, that because Musk was a controlling shareholder with a potential conflict of interest, the pay package must be subject to a more rigorous standard.
“The process leading to the approval of Musk’s compensation plan was deeply flawed,” McCormick wrote in the colorfully written 200-page decision. “Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf.”
McCormick specifically cited Musk’s long business and personal relationships with compensation committee chairman Ira Ehrenpreis and fellow committee member Antonio Gracias. She also noted that the working group working on the pay package included general counsel Todd Maron who was Musk’s former divorce attorney.
“In fact, Maron was a primary go-between Musk and the committee, and it is unclear on whose side Maron viewed himself,” the judge wrote. “Yet many of the documents cited by the defendants as proof of a fair process were drafted by Maron.”
McCormick concluded that the only suitable remedy was for Musk’s compensation package to be rescinded. “In the final analysis, Musk launched a self-driving process, recalibrating the speed and direction along the way as he saw fit,” she wrote. “The process arrived at an unfair price. And through this litigation, the plaintiff requests a recall.”
Greg Varallo, a lead attorney for the shareholder plaintiff, praised McCormick’s decision to reverse the “absurdly outsized” Musk pay package for Musk.
“The fact that they lost this in Delaware court, it’s a jaw dropper,” said Wedbush Securities analyst Dan Ives. “It’s unprecedented, a ruling like this. I think going in investors thought it was just typical legal noise and nothing was going to come out about it. The fact that they went head to head with Tesla and Musk and the board and voided this, it’s a huge legal decision.”
During his trial testimony, Musk downplayed the notion that his friendships with certain Tesla board members, including sometimes vacationing together, meant that they were likely to do his bidding.
The plan called for Musk to reap billions if Tesla hit certain market capitalization and operational milestones. For each incidence of simultaneously meeting a market cap milestone and an operational milestone, Musk, who owned about 22% of Tesla when the plan was approved, would get stock equal to 1% of outstanding shares at the time of the grant. His interest in the company would grow to about 28% if the company’s market capitalization grew by $600 billion.
Each milestone included growing Tesla’s market capitalization by $50 billion and meeting aggressive revenue and pretax profit growth targets. Musk stood to receive the full benefit of the pay plan, $55.8 billion, only by leading Tesla to a market capitalization of $650 billion and unprecedented revenues and earnings within a decade.
Tesla has achieved all twelve market capitalization milestones and eleven operational milestones, providing Musk nearly $28 billion in stock option gains, according to a January post-trial brief filed by the plaintiff’s attorneys. The stock option grants are subject to a five-year holding period, however.
Defense attorney Evan Chesler argued at trial that the compensation package was a “high-risk, high-reward” deal that benefitted not just Musk, but Tesla shareholders. After the plan was implemented, the value of the company, based in Austin, Texas, climbed from $53 billion to more than $800 billion, having briefly hit $1 trillion.
Chesler also said Tesla made sure that the $55 billion compensation figure was included in the proxy statement because the company wanted shareholders to know that “this was a heart-stopping number that Mr. Musk could earn.”
Delaware Supreme Court Justice Karen L. Valihura announced Wednesday that she will lead a new corporate law institute at the Wilmington University Farnan School of Law.
She will step down from the bench of Delaware’s highest court in late July, after choosing not to seek reappointment at the end of her 12-year term. She revealed her plans for the next phase of her legal career in a special session of the court in Wilmington.
As well as joining the Wilmington University law school faculty, Valihura will be the founding director of the school’s new Corporate Law, Governance and Practice Institute. …
Wilmington Police are investigating the fatal shooting of a 16-year-old boy Tuesday night in Wilmington’s Hilltop neighborhood.
According to police, the shooting occurred at approximately 8:33 p.m. in the 1600 block of West 5th Street.
On their arrival at the scene, police say they located the 16-year-old with at least one gunshot wound and transported him to a local hospital, where he later died from his injuries.
This incident remains under investigation.
Police did not share whether there have been any arrests in connection with the shooting or a possible motive.
Wilmington Police encourage anyone with information about this incident, contact Detective Justin Wilkers at (302) 576-3634. Information can also be sent to Delaware Crime Stoppers at 1-800-TIP-3333, or Delawarecrimestoppers.com.
The Wilmington Police Department (WPD) Victim Service Unit and Youth Response Unit are available to provide information and support to victims, children, and families affected by this incident.
The Victim Service Unit can be reached at (302) 576-3622, and the Youth Response Unit can be reached at (302) 576-3183.
NEW CASTLE COUNTY, D.E, – Two 17-year-olds, Cara and Nathan, were struck and killed while walking on South Dupont Highway, according to Delaware State Police. Police say the driver did not stay at the scene, but investigators have now arrested a suspect.
Community mourns teens killed on South Dupont Highway
What we know:
Delaware State Police say the crash happened around 1:10 a.m. last Sunday while Cara and Nathan were walking an e-bike in or near the left lane of southbound Dupont Parkway near Denny Lynn Drive. Police say the driver initially stopped but then left the scene.
Troopers later arrested 23-year-old Nizaiah Ellis during a traffic stop and say the car had damage consistent with the crash.
Police say the two teens were headed to Cara’s house to leave for a trip with her family later that day.
Family and friends gathered Tuesday for a memorial to remember Cara and Nathan.
“It’s still new. It comes in waves but sometimes you just feel paralyzed and numb,” said Rachel Roderick and Heather Feeley, the teens’ mothers.
“I want others to hug their babies extra tight. Take so many photos you don’t know what to do to them. (Say yes to your kids more.)” said Roderick and Feeley.
“Forgiveness would have been easier had he not left our babies. Left. So senseless,” said Cara’s mother, Heather Feeley.
Roderick said, “It’s beautiful. The love is what’s keeping us going. The support of the community.”
The teens’ lives and dreams remembered
Cara graduated high school a year early and was a student at Del Tech, hoping to become a cosmetologist.
Nathan would have been a senior in high school this fall and wanted to own a mechanics business working on boats, motorcycles and cars.
Family and friends described the teens as kind and deeply loved.
“They were so kind. They loved everyone as is displayed here today. No one was not a friend and they loved each other immensely,” said Feeley. “They both touched so many lives and I don’t even think they realized how big of an impact they left on everyone,” said Roderick.
Kaelynn Miller, one of Cara’s best friends who helped organize the memorial, said, “Kara and Nathan never deserved this. If anyone is listening to this they weren’t just a person. The people you took were some of the most genuine souls out there.”
Today would have been Cara’s 18th birthday. Parents said the two were dating at the time of their deaths.
A GoFundMe has been set up for Cara’s family and Nathan’s family.
What we don’t know:
Police have not released further details about the investigation or any potential charges for the driver.
Additional information about the ongoing case has not been provided.
The Source: Information from Delaware State Police and interviews at the memorial.
-
Politics1 minute agoTrump refuses to sign landmark housing bill, demanding Congress pass voter ID law
-
Sports11 minutes agoMexico celebrates magical World Cup win over Czechia at rowdy Azteca Stadium
-
World23 minutes agoVenezuela rocked by 7.5 and 7.2 earthquakes: What we know
-
News53 minutes agoWith a Round of 32 spot already clinched, the U.S. takes on Turkey in the World Cup
-
Los Angeles, Ca2 hours agoHospital needs help identifying man found unconscious in downtown Los Angeles
-
Detroit, MI3 hours agoLarge police presence for an investigation on Detroit’s west side
-
San Francisco, CA3 hours agoNo tolerance for hate or crime at SF Pride this weekend, officials say
-
Dallas, TX3 hours agoAlanna Smith injury update: Dallas Wings player in concussion protocol
