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Back in January of this year, Kathaleen McCormick of the Delaware Court of Chancery decided that Elon Musk could not be paid the $55 billion he had negotiated as a salary back in 2018. At the time, the plan was to grant Musk stock worth about $2 billion dollars if he met a long series of performance metrics for the company. He eventually met all of those metrics but a small-time stockholder named Richard Tornetta sued. Judge McCormick agreed with him that Musk has undue control over the board members who approved the package.
Tornetta’s lawyers have highlighted the friendships between Musk and many of his board members who created the deal. Some have vacationed together in places like magician David Copperfield’s private island in the Bahamas, where Musk summoned his brother Kimbal and Gracias in 2017 to determine if James Murdoch should join Tesla’s board, according to Kimbal’s deposition which played in court this week. Murdoch, who described himself as a friend of Elon Musk’s since 2006, joined them on Copperfield’s Island for part of the trip, and joined the board shortly thereafter.
Shortly after the judge announced her decision, Musk called on Tesla’s stockholders to ratify his pay package by voting to approve it. They did so overwhelmingly in June, with 77% voting to approve the same package Judge McCormick had denied. Musk’s lawyers then went back to the court and asked the judge to reconsider. Today she issued her decision listing four reasons why she could not do so.
McCormick said Tesla’s board was not entitled to hit “reset” to restore Musk’s pay package.
“Were the court to condone the practice of allowing defeated parties to create new facts for the purpose of revising judgments, lawsuits would become interminable,” she said in her 101-page opinion.
Here’s the judge’s explanation of her second reason for refusing to reconsider, taken from the decision itself. The argument here is that Musk is simply too late because the factual record was closed long ago.
