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It started with a simple question: Was the richest person in the world overpaid? While the Delaware Court of Chancery twice concluded yes — Elon Musk’s Tesla compensation package was indeed unreasonably large and flawed in its process — the debate continues as to whether the decision was faithful to Delaware’s governance processes or an affront to shareholder democracy. In today’s conversation, Amy Martella is joined by Fordham Law colleagues Sean Griffith and Richard Squire, and we begin by breaking down Musk’s Tesla compensation package and the two rulings issued by the Delaware Court of Chancery. We examine both rulings in more detail before ironing out the finer details of the latest Tesla shareholder ratification vote. Then, we assess the source of authority in corporations and how this power is structured, the judicial rules that corporations have to adhere to, the relationship between agency law and trust law, and the ins and outs of derivative suits and the shareholder power that comes with it. To end, we envision what may happen next as Musk appeals to the Delaware Supreme Court, how his actions and relation to President Trump may affect future verdicts, and inconsistencies in Delaware corporate law with suggestions for improving it.
Key Points From This Episode:
Links Mentioned in Today’s Episode:
Tornetta v. Musk second opinion
Tornetta v. Musk first opinion
‘Saints and Sinners: How Does Delaware Corporate Law Work?’
‘Corwin, et al. v. KKR Financial Holdings LLC., et al.’
Fordham University School of Law Corporate Law Center