Revisiting the Ruling that Led to Tesla’s Crucial Shareholder Vote

There has been a silly amount of drama in the run-up to Tesla‘s annual shareholder meeting on Thursday. It will also hold a vote whether the company will change the location where it is incorporated from Delaware to Texas. Some of Tesla’s biggest boosters are calling on the company’s “retail army” of shareholders to vote in favor of both, but with special focus on Musk’s compensation. “A deal is a deal,” Tesla posted to its CEO’s social media platform X. At the very least, it’s a primer for the legal battles that are sure to continue after Thursday’s vote.

There has been a silly amount of drama in the run-up to Tesla’s annual shareholder meeting on Thursday. The company is set to hold a vote on “re-ratifying” the $56 billion compensation package awarded to Elon Musk in 2018, which was struck down by a Delaware Chancery Court judge earlier this year. It will also hold a vote whether the company will change the location where it is incorporated from Delaware to Texas.

Some of Tesla’s biggest boosters are calling on the company’s “retail army” of shareholders to vote in favor of both, but with special focus on Musk’s compensation. It’s not clear what tangible impact the outcome of either vote will have. But Tesla executives and employees — including some who basically never post on social media — are simply begging for votes.

Across the breathless longform posts, Spaces audio meetings, podcasts and myriad other calls to action, the focus has been trained on the idea that Musk is owed this compensation because he hit the targets agreed to at the outset. “A deal is a deal,” Tesla posted to its CEO’s social media platform X.

Yet, almost no one is discussing the substance of chancellor Kathaleen McCormick’s January ruling and its dominant theme: Musk holds so much sway over Tesla and its board of directors that there was no substantial negotiation when the company hammered out this deal with him in 2017-2018.

Instead, there have been accusations from the Tesla faithful of her being a “radical activist judge” — accusations that are easily defanged as you read through her examination of the evidence of the case.

So, some homework then! To the Tesla fans, haters, shareholders and rubberneckers, here it is again, embedded below. McCormick’s 201-page opinion is a thorough but lucid read. It’s worth brushing up on it again before the vote takes place. At the very least, it’s a primer for the legal battles that are sure to continue after Thursday’s vote.