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In light of the Delaware Court of Chancery’s unusual step to override Tesla’s shareholder-approved compensation plan for Elon Musk twice in a row, Wall Street analysts are now weighing in on the way ahead, with Wedbush’s flamboyant analyst, Dan Ives, using predictably colorful phrases to delineate his thoughts on the topic.
In another Twilight Zone legal move from Chancellor McCormick of the Delaware Court yet again blocked the Musk $56 billion pay package that has been approved by Tesla shareholders now 2x. Tesla/Musk we expect will win this case at the Supreme Court as battle rolls on 🔥🐂🍿📍🥊
— Dan Ives (@DivesTech) December 3, 2024
To wit, Dan Ives has termed the decision of the Delaware Chancery Court Chief Judge, Kathaleen St. J. McCormick, to again terminate Elon Musk’s shareholder-approved compensation plan as “another Twilight Zone legal move.”
As such, Ives now believes that this issue will be ultimately resolved only in the US Supreme Court:
“Tesla/Musk we expect will win this case at the Supreme Court as battle rolls on.”
For the benefit of those who might not be aware, Tesla faced a trial in the Delaware Court of Chancery in 2022, where one of its shareholders, Richard Tornetta, alleged that Elon Musk’s 2018 compensation plan should be voided by the court as it was a result of sham negotiations between a beholden board and an all-powerful CEO.
At the conclusion of that trial in early 2024, the Delaware Chancery Court Chief Judge McCormick voided Elon Musk’s compensation plan, prompting Musk to declare that Tesla would abandon Delaware and reincorporate in Texas. However, Elon Musk’s lawyers assured the Delaware Chancery Court that it would continue to retain jurisdiction over the matter of the Tesla CEO’s compensation.
To counteract the court’s negative ruling, Tesla and Elon Musk opted for a shareholder-led re-ratification of the compensation plan under section 204 of the Delaware General Corporation Law, which provides for rectifying corporate acts that are defective due to a “failure of authorization” but not breaches of fiduciary duty, as alleged in this case.
As we noted yesterday, Judge McCormick has now refused to accept the re-ratified pay package, going so far as to note:
“Even if a stockholder vote could have a ratifying effect, it could not do so here.”
Tesla shares are down 1 percent at the time of writing, highlighting the investor conviction that this issue will ultimately resolve in Elon Musk’s favor. Bear in mind that Musk has previously hinted at quitting Tesla should he fail to win an appropriate pay package.
Boy does that Delaware judge hate Musk.. holy cow!!
— Jim Cramer (@jimcramer) December 3, 2024
Meanwhile, Jim Cramer is also out today with his signature hyperbole.
18,730 Tesla sales in China last week is pretty good. This was the second-best week in Tesla’s history. To achieve this, Tesla came up with a ¥10,000 Yuan ($1,373) discount in addition to the ¥20,000 Yuan ($2,746) ‘Cash for Clunkers’ government incentive. Both incentives end at…
— Troy Teslike (@TroyTeslike) December 3, 2024
In other news, Tesla has now recorded its second-best sales week in China, courtesy of a veritable host of incentives. This comes as the EV giant continues to contend with brand image challenges in the EU and the US.
Also, Tesla is now rolling out the 13th version of its FSD, which is expected to unlock significantly more miles driven without any manual intervention and pave the way for autonomous parking in a garage.
