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Notes -
Huge tax implications for Musk, also a large short term accounting hit to Tesla.
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That the decision looks "boring" on some level says nothing about the motivation for it. It is not uncommon for arbitrary authority to cloak itself in the trappings of inevitable procedure... even when another authority could have come to a completely opposite decision based on the same procedure.
Anyway, it's $55B, not $10B, and if they'd awarded him a new grant there would have been various negaive accounting and tax consequences and in any case, there would immediately be a second shareholder lawsuit on the grounds that since the company had no obligation to pay Musk anything at all, the new grant constituted a gift to him and a violation of Tesla's fiduciary duty to its shareholders.
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This surprises me because Tesla clearly believed that the shareholder vote meant something. Are they idiots? I doubt it.
But even if this appeal was decided on boring procedural grounds, the original decision was very much about a woke judge sticking it to Musk.
And the judge could have at least limited the lawyers fees to something reasonable to prevent moral hazard.
If your read the opinion from the judge it's clear that, yes, Tesla was dumb in the way they went about it. If Tesla had done a shareholder vote at any point in the five years this lawsuit was ongoing, that could have ratified the package. Instead Tesla waited until they had lost and then did the shareholder vote to try and get the judge to reverse her decision. She also points out independent reasons why the shareholder vote wouldn't have the ratifying effect Tesla wants, including that the proxy statement for it contains material and misleading statements.
The opinion is monumentally dumb, departing from the three prior rulings which wisely declined not to tread in this shaky ground and "going boldly where no man has gone before" to absolutely violate the fuck out of federal labor law. The judge flat out admits this rescission leaves Musk uncompensated for five years of labor, cloaking it in the fig leave of "well he made a bunch of money on the stock he already owned." That's not how employment law works- employees, including CEOs, must be compensated for their labor, this is a bedrock principle of America, we even have a fucking constitutional ammendment about it.
The judge can rule it was an unfair agreement, but to abrogate responsibility to determine fairness (with a piss-poor cite to another case about bonus claw backs where employees were still paid salaries) and simply say "nope, actually slavery is fine" because she didn't like how Tesla argued the case is gross misconduct.
I get that Musk is not a sympathetic plaintiff, and I get that Tesla didnt take this seriously, but the fact that a judge can rescind a mutually agreed upon contract and leave an employee with zero dollars for five years of work and no one is making a bigger deal of it is fucking mind blowing to me. This is the kind of precedent that kills democracy. At the very least, Deleware suddenly became a very unattractive state to incorporate in.
I mean, it becomes a very unattractive state to any company that doesn't obey the party. If they can keep alternatives from developing, this is just another win win for them.
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I mean.. maybe. But why would they do a shareholder vote to immunize themselves against a frivolous, politically-motivated lawsuit filed by a guy who had 8 shares of Tesla? Shareholder votes are not free.
And would the judge have really listened to the vote anyway? It's easy for her to say now. I'll admit I really don't have a lot of patience for the legal details when it seems that judges just use them as justifications for doing the things they were going to do anyway.
What is the evidence that the plaintiff of judge are politically motivated? "Company fails to take lawsuit seriously, gets wrecked" does not sound like a crazy thing? I would probably describe the Hogan-Gawker lawsuit similarly.
It's not just the judge saying this, she cites a bunch of Delaware precedent that votes during litigation can function as ratification for the corporate acts in question. Tesla (for obvious reasons) cannot find a single precedent that post-judgement shareholder votes can serve as a basis for overturning that judgement.
Yes, by begging the question and assuming that the judge is correct on all aspects, then clearly Tesla is in the wrong here.
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The evidence is that it’s absurd to bring a lawsuit against a company that made you a ton of money?
That hadn't happened when the lawsuit was filed. OP gets the order of events wrong. The lawsuit was filed 5 months after the package was awarded, well before performance targets were hit.
It's even more absurd to bring a lawsuit against a company for either making you a ton of money (if targets, which included market cap, are hit) or getting its CEO to work for you for free (if they aren't).
This logic justifies literally any pay award. The whole point of the suit is that the process by which Musk's award amount was reached was biased in his favor, not a neutral process.
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