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Tesla's stock started revving up Thursday morning after Elon Musk tweeted that he had the votes to secure approval for 1.) Moving Tesla’s state of incorporation from Delaware to Texas and 2.) Ratifying Musk’s CEO pay package previously approved at Tesla’s 2018 special meeting. The vote was a culmination of a months-long campaign by Musk and the Tesla Board asking shareholders to reinstate Musk’s pay package that was overturned earlier this year by Chancellor Kathaleen McCormick. Tesla had to overcome unfavorable recommendations from ISS and Glass Lewis. Leading up to the vote, Musk posted on X that 90% of retail shareholders had voted in favor of the compensation package.
Now we turn back to Delaware. The Wall Street Journal’s Corrie Driebusch notes that the latest vote won’t necessarily convince Chancellor McCormick to reverse her initial decision, and even if the ruling is reversed, additional legal hurdles exist and will most likely require the Delaware Supreme Court to have the final say, according to Tulane Law Professor Ann Lipton.
Elsewhere on the Delaware docket, the Moelis decision is increasingly dividing legal experts. On one side is the Delaware State Bar, which recently proposed an amendment that would reverse the Moelis decision without any Delaware Supreme Court review. In case you need a catch-up, the Columbia Law School Blue Sky Blog recaps what has transpired since the Moelis decision and examines whether “a quick legislative fix” – i.e. the proposed amendment – is the appropriate solution.
On the other side of the debate are dozens of corporate law professors who “unanimously” came out against the proposal late last week writing, “the issues at stake warrant careful judicial review, not hasty legislative action.” Pausing their summer break, several of those professors arrived in Delaware, with Brian Quinn, a professor at Boston College Law School, telling the Senate committee the speed of the amendment package is “entirely unprecedented.” Lauren Pringle, editor-in-chief of the influential Chancery Daily, noted that the public outcry is not often seen in Delaware and is clear evidence of opposition to the amendment.
Despite all this, on Tuesday the measure passed the Senate's Judiciary Committee. Next up, the state House committee and full chamber will have a say before heading to Gov. John Carney for consideration.
Have a great weekend,
GPP team
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