Topics
late
AI
Amazon
Image Credits:Samuel Corum/Bloomberg / Getty Images
Apps
Biotech & Health
Climate
Image Credits:Samuel Corum/Bloomberg / Getty Images
Cloud Computing
Commerce
Crypto
Enterprise
EVs
Fintech
fundraise
Gadgets
Gaming
Government & Policy
Hardware
Layoffs
Media & Entertainment
Meta
Microsoft
Privacy
Robotics
surety
societal
distance
Startups
TikTok
Transportation
speculation
More from TechCrunch
issue
Startup Battlefield
StrictlyVC
Podcasts
video
Partner Content
TechCrunch Brand Studio
Crunchboard
Contact Us
Delaware Chancery court judge Kathaleen McCormick has refuse Tesla ’s request to revise her decision to run into down CEO Elon Musk ’s $ 56 billion pay software program — despite shareholdersvotingat the company ’s yearly meeting this year to “ re - sign ” the heap .
Her decision , lay out in a 103 - pageopinionpiece published on Monday , explains that the attempt by Tesla ’s effectual team — which Musk has call “ hardcore ” — to convert her psyche contained multiple flaw , each of which were fatal on their own .
“ The large and gifted group of defense business firm got originative with the ratification argument , but their unprecedented theory go against multiple strain of settle law , ” McCormick wrote .
Tesla say it will appeal in apost on X , and has been expected to appeal to the Delaware Supreme Court since McCormick ’s initial opinion was issued inJanuary . Since then , though , the company hasreincorporatedfrom Delaware to Texas . Musk is also now a kind of right - hand man to President - elect Donald Trump , raising all kinds of questions about his antecedency as the United States lead into a Modern administration .
McCormick also award the complainant ’s attorneys a $ 345 million fee — collectable in cash or Tesla shares — that is heart - popping but still a fraction of the $ 5.6 billion those lawyers requested before this class .
Tesla award the compensation package to Musk in 2018 , at a time when the galvanic automaker was in crisis . It laid out a serial of stock Leontyne Price milepost that Tesla would have to hit in ordering for Musk to unlock the full note value of the package — milestones the company easily cleared in the following years as Tesla ramp up its Model 3 and Model Y programme .
A former incarnate Department of Defense lawyer ( and toss metal drummer ) Richard Tornettasued Tesla over the good deal . His lawyers argued that stockholder were misinformed because the troupe and its board of theatre director were under such with child influence from Musk that the negotiations besiege the package were wonky . There was a test , and Judge McCormick explained in herJanuary opinionthat she found the essence of Tornetta ’s argument to be true .
Join us at TechCrunch Sessions: AI
Exhibit at TechCrunch Sessions: AI
Tesla put the opinion to a vote at its shareholder merging this June , in an endeavour to re - sue the great deal in the lawcourt of public opinion .
The company released a whole new proxy statement that included McCormick ’s January vox populi and fence that it would now in full inform the shareholders as they set out to vote a 2nd time . They approved the re - confirmation by a border of more than two to one , and Tesla ’s attorney attempt to practice this to win over the judge to change tack .
But McCormick wrote Monday that Tesla ’s legal team has “ no adjective earth for flip the result of an adverse post trial determination base on evidence they created after trial . ” That was one “ fatal defect , ” she tell . The second is more procedural : Tesla ’s sound squad considered the vote a “ vulgar - law ” confirmation , which is an approbative defense , and those ca n’t be put forward after a post - trial public opinion is released .
Third , McCormick challenged the common - law confirmation idea on its boldness . While Tesla ’s attorney argued that “ stockholders curb the index to adopt any bodied acts they deem in their own good interests , ” McCormick said this musical theme is “ doubtful generally and unquestionably false in the context of ” how Tesla ’s governing body was essentially get by Musk .
Fourth , McCormick said that “ even if the Stockholder Vote could have a ratifying effect on the Grant , it could not here due to multiple , material misstatements in the Proxy Statement concerning the effect of the vote . ”
“ Novelty is not necessarily damnatory , but Defendants ’ refreshing asking fly in the face of the policy bases for all relevant rules of procedure and the law - of - the - case doctrine — finality , efficiency , consistency , and the integrity of the judicial operation , ” McCormick wrote .
This story has been updated to admit Tesla ’s confirmation that it will invoke the decision .
