OPINION:
Elon Musk will not be allowed to get away with heresy.
After growing to appreciate the values of faith, family and freedom, the serial entrepreneur decided to endorse Donald Trump. He is now being penalized $56 billion for that sin.
Kathaleen McCormick, a jurist in the Delaware Court of Chancery, on Monday upheld her prior decision voiding the eye-popping compensation package the South African-born CEO had negotiated for running Tesla Motors. Her honor decided she knows better than the company’s shareholders, who overwhelmingly backed the deal.
In isolation, paying one man $56 billion seems like a lot — because it is — but the number doesn’t tell the whole story. While taking no salary, Mr. Musk proposed to earn payment only if he created fantastic growth for his electric car venture.
Many at the time ridiculed Mr. Musk’s overly optimistic assessment of what he could do, saying he’d never meet the ambitious performance targets. But he did. Tesla is now worth over $1 trillion — to the delight of anyone who bought Tesla stock.
That’s a joy Democrats do not share. They remain bitter over Mr. Musk’s $44 billion expenditure turning Twitter into the free-speech platform X. The Tesla windfall would have covered that prodigious expense.
Democrats are in a position to satisfy their desire for revenge in Delaware, as the levers of power are in the hands of President Biden’s best friends. Chancellor McCormick, for instance, was appointed by Gov. John Carney, for whom Mr. Biden and his son Hunter both campaigned.
It’s not hard to see how a left-leaning judge would question the need for any one man to take home $56 billion. In particular, Chancellor McCormick asserts there’s no evidence that Mr. Musk had anything to do with Tesla’s success.
That flies in the face of the evidence of the extraordinary things Mr. Musk has done with the proceeds from his various undertakings. In addition to his defense of free speech, he has pioneered the creation of reusable vehicles for space exploration — with the goal of landing a man on Mars. He has created technology that gives the paralyzed new abilities to function in society. He has connected the world’s most rural areas to the internet at a reasonable price.
Even though 72% of shareholders voted to approve Mr. Musk’s compensation package, the court decided this endorsement was irrelevant because the investors were unsophisticated rubes too dumb to realize how much money was at stake.
“The stockholder vote is one component of the fair price analysis, but whether the vote represents a form of market evidence that can support a certain price depends on the sufficiency of the disclosure,” her honor said.
It says a lot that this suit was brought by a man holding a paltry $3,300 worth of stock, and the rest of Tesla’s shareholders must now pay $345 million to the small-time investor’s attorneys. Unsurprisingly, Chancellor McCormick did not find that outsize payday excessive.
Mr. Musk will appeal, saying, “Shareholders should control company votes, not judges.”
Regardless of the outcome, the loser in this matter won’t be Mr. Musk — he will remain the world’s richest man. The First State has sullied its reputation as a corporate haven, and CEOs are going to take note.
This is good news for Florida. The Sunshine State has already moved into the No. 3 position in per capita business filings. It may soon overtake Delaware as more executives recognize the peril of the Blue State.
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