‘4 mistakes’ for which Tesla wants to pay Elon Musk $100 billion, according to the judge who violated his payment.

On 101 pages thoughtsDelaware Court Chancellor Kathleen McCormick refused to change the previous decision to cut Musks salary. Actually, he wrote, the arguments that the representative of Tesla and some of his members were “creative,” but he missed. McCormick They previously removed Musk’s salary from the original decision, and, after losing the lawsuit, Tesla voted in June 2024 to pay Musk what Tesla’s board said was his due. Tesla Chairman Robyn Denholm told shareholders that the organization stood behind the compensation, and urged investors to re-approve Musk’s salary as a way to reverse the court decision, which the shareholders overwhelmingly voted for by 72% in June 2024.

Tesla told investors that the vote, which it called a “common law approval,” could prevent the agency from violating its mandate to provide plans. “When properly established, the acceptance of common law” goes back to justifying the objection as it was first established,” Tesla. he wrote to the shareholders.

The court rejected that approach.

“There are at least four errors,” McCormick wrote in his ruling. “A large and talented group of security companies have developed a consensus view, but their unprecedented views run counter to a number of established rules.” (McCormick wrote in his ruling that Tesla “provided an attorney” on the day it filed its April filing asking shareholders to approve Musk’s payout by adding five other law firms to the list of attorneys representing defendants in the payout lawsuit.)

In a post on XTesla wrote that the court was wrong and plans to appeal the decision.

“This decision, if not overturned, means that judges and appellate lawyers run Delaware companies on behalf of their owners – the owners.”

So what exactly led McCormick to his decision? Here are “four dangerous mistakes,” he explained:

Mistake #1: Tesla had no reason to change the court’s decision

First, Tesla argued that the stock vote was a “powerful thing” that could cure the wrongdoing in its April statement, McCormick wrote. But Tesla had no reason to change the court’s decision based on the evidence it produced after the trial, the opinion says. Tesla’s lawyers later abandoned this during oral arguments in court, leaving behind a more aggressive statement and instead sought to “make amends” without contesting the court’s findings. However, McCormick wrote, the attorneys requested “a summary judgment against all defendants,” which would have been a violation of the court’s decision in Tesla’s favor.

“Therefore, the ‘only relief’ sought by Defendants at the time of oral argument was to ‘change the course’ of dismissal and change the entire outcome of the case in favor of Plaintiffs,” the judge wrote, emphasizing his point with a clear phrase. : “That’s it.”

Mistake #2: Timing. Acceptance of common law cannot be raised after a test of ideas

Second, Tesla raised a statutory defense at common law after The decision to freeze his salary came after the trial — a full six years after the lawsuit was filed, a year and a half after the trial, and five months after the court’s decision, McCormick wrote. No court has ever allowed the approval of a stock after it has been dissolved, that is the only one except in the past 70 years, McCormick wrote.

“Wherever there are the outer limits of indiscriminate delay, the Prosecution has crossed them,” he wrote. “The Court declines to exercise its discretion to permit the Defendants to file a defense of stock approval at this time.”

Mistake #3: Tesla’s method did not stick to established rules

The third and most important flaw that McCormick pointed out had to do with the laws that Tesla relied on. He wrote that the vote alone wasn’t enough to approve the “discretionary controls,” which Musk’s support described in McCormick’s previous proposal to cut his salary. “Unbalanced transactions pose a number of risks to minority shareholders,” he wrote. And especially in this case, there is what is called “tunneling risk,” in which someone who has control of the company may try to advance through transactions related to the party.

Because of the high risk, the court applies a strict standard of review that requires steps such as a special review by a special committee and an informed vote of shareholders, among other requirements. Tesla’s method did not fit the established criteria.

“Defendants’ failure to comply with the process of obtaining stock approval in non-consensual jurisdictions provides an independent basis for rejecting the Ratification Dispute,” he concluded.

Mistake #4: Too many physical mistakes

Finally, the April proxy statement that asked shareholders to approve Musk’s pay after the court dismissed it was “misleading,” McCormick wrote. He said, “there are many ways in which the Proxy Statement distorts the truth” but one failure was that much of what Tesla told shareholders in the proxy statement was either false or misleading.

Each of the four alleged constitutional errors was sufficient to justify a motion to review the decision, McCormick wrote.

“Put together, they pack a powerful punch.”

Tesla did not immediately respond to a request for comment.

How do you stand apart from the world’s most powerful leaders? Find out who made our new list of 100 Most Powerful People in Business. Also, learn about the metrics we’ve already created.