Elon Musk will depart after a meeting with Indian Prime Minister Narendra Modi at Blair House in Washington, DC, USA on February 13, 2025.
Nathan Howard | Reuters
Law firms representing Tesla and Elon Musk have now changed laws in Delaware, according to people who are directly familiar with drafting the bill they asked to remain unknown to talk about the issue. I proposed it.
The proposed law, drafted by Richards, Leighton & Finger, or RLF, amends the law of Delaware’s general business, and if adopted, the road to reinstatement at Tesla for Musk’s 2018 CEO pay package can be opened. .
RLF confirmed its involvement in CNBC.
“A statutory change is required to restore the core principles that were characteristic of Delaware for over a century and to maintain its outstanding jurisdiction for establishment,” said Lisa Schmidt, president of RLF. said in a statement.
A spokesman for the law firm said that the role of RLF in the draft law was not played on behalf of certain clients.
The bill was introduced in the Delaware Legislature on Monday and requires approval by Gov. Matt Meyer, as well as two rooms in the state before it becomes law.
According to Brian JM Quinn, a law professor at Boston College, the bill had no experience of the usual procedures for laws seeking to change Delaware’s law law. For decades, such laws have been drafted, discussed and reviewed by the Delaware State Bar Association’s Law Council before going to Congress, he said. The council, which includes lawyers with a wide range of clients and interests, was not discussed on the bill before it was submitted, Quinn said.
After CNBC released the story, Delaware Secretary of State Charuni Patibanda-Sanchez called for a review of the proposed law and said, “We will see the final product that meets the evolving needs of all stakeholders.” I look forward to it,” he said in a statement he said in an emailed statement. “
Sen. Elizabeth Warren, a ranking member of the Senate Banking Committee, called drafted law musk’s “the latest plan to tear Americans apart and enrich themselves and fellow billionaires.”
“Musk wants to write his own law to take tens of thousands of dollars from Tesla shareholders after the court said he can’t,” D-MA’s Warren told CNBC in a statement Wednesday. He spoke. “Because the Corporate Act protects the rights of minority shareholders, greedy controlling shareholders like Musk cannot take away the protections for Main Street investors.”
Mask clash with Delaware
The pay package granted to masks in 2018 was the largest CEO compensation plan in public business history and was worth a potential $55.8 billion, but in early 2024, the Delaware Chance Court revoked it I ordered it.
In her ruling, Prime Minister Cataline McCormick said that the pay plan was inappropriately set up by Tesla’s board of directors controlled by masks and approved by shareholders who were misunderstood by Tesla’s proxy material before they voted. I wrote it.
Under the proposed law, the mask may no longer be considered a Tesla “controller,” Quinn said. That’s because Musk currently doesn’t have a third of Tesla’s voting securities. This is because it will be a requirement under the proposed law. These transactions range from substantial transactions to mergers and acquisitions, and board and executive compensation decisions.
“The real role of legal law is to protect minority investors,” Quinn said. “With this bill, Congress has said, ‘What do you know now? We’ll protect them less.” ”
The proposed law would also limit the types of documents that minority stakeholders can obtain through “books and records” inspection requests, Quinn said. These stakeholders are limited to formal items such as certificates of establishment and shareholder meeting minutes, but lose access to informal communications such as emails and other messages between executives. Quinn said.
Last year, after the Chancery court, Musk launched a campaign to persuade businesses not to be incorporated into Delaware, moving the location of the incorporation out of state for his business. He aimed for rage in McCormick with repeated light-paper posts about her on his social network, X.
Other business leaders have also criticised Delaware justice. Bill Ackman, CEO of Pershing Square and Coinbase CEO Brian Armstrong complained about Delaware’s “activist judge” at X earlier this month.
“Delaware has taken away some heat because it appears to be too difficult in the controller transaction,” says Renee Zaytsev, a partner at Boies Schiller and co-chair of the company’s securities and shareholder dispute practices. said.
“These amendments seem to be course amendments that greatly facilitate boards and controllers to avoid judicial scrutiny of transactions,” she said.
Tesla and Musk did not respond to requests for comment.
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