Hints and tips:
...Downing Street has been accused of blocking the former parole board chair, who resigned over thwarted plans to release a serial sex offender, from becoming the parliamentary ombudsman....
...The Delaware court this year invalidated such a practice at the investment bank Moelis & Co, which had given its founder veto power over nearly all of the standard work conducted by a board of directors....
...Delaware has been accused in the past of being over-friendly to boards; it now faces a fresh judicial challenge. The US tradition of legal competition among states is distinctive....
...Elon Musk’s $55bn pay package from Tesla has been voided by a Delaware judge, who ruled that the unprecedented compensation was improperly approved by the automaker’s board of directors and had short-changed...
...Such “co-operation agreements’‘ between boards and dissident shareholders have been threatened by recent Delaware rulings....
...After meeting in early February without Musk or his brother Kimbal, Tesla’s board convened a special committee to study the plans....
...One of the panel discussions, however, pointed out multiple other lower-profile cases that have been unfriendly towards CEOs and incumbent boards....
...Sujeet Indap Delaware generally lets boards of directors and CEOs run companies how they see fit, and they don’t second-guess most decisions....
...His law firm, Wachtell Lipton Rosen & Katz, later dominated the practice of representing corporate boards in Delaware disputes, even hiring multiple Delaware judges after they retired from the bench....
...Companies such as Elon Musk’s X and Charlie Ergen’s Dish Network are incorporated in Nevada where boards face less scrutiny. Greg Maffei’s Liberty TripAdvisor is also seeking to move to the state....
...McCormick ruled that Musk had exerted undue control over the company’s board despite owning a minority of Tesla. He was the “paradigmatic ‘Superstar CEO’”, she wrote in the ruling....
...Robyn Denholm, chair of Tesla’s board, wrote to shareholders on Wednesday asking them to approve the move to Texas and to ratify Musk’s pay package, which they previously approved at a meeting in 2018....
...The bigger picture is that Delaware chancery courts are there to make sure company boards and management are behaving appropriately....
...In this week’s ruling in Delaware, McCormick said Musk’s record-breaking $56bn remuneration package had been improperly approved by the company’s board and had short-changed shareholders....
...The Delaware court agreed with the plaintiff that Musk “controlled” Tesla even with just a 20 per cent stake in 2018....
...So it is not surprising that Delaware’s chancery court has had enough. Indeed, the board might have got away with a similar outcome if it had just taken a bit more care about it....
...The state tends to be more deferential to the decisions of boards with such large shareholders. TripAdvisor, controlled by Greg Maffei, recently has attempted to move from Delaware to Nevada....
...That was the position taken by Delaware chancery court judge Kathaleen McCormick, who noted that Elon Musk’s remuneration was 250 times the relevant benchmark for chief executives....
...McCormick ruled the Tesla board was insufficiently independent of Musk, and that the governance process leading to the grant as well as the value of the shares had been “unfair” to other shareholders....
...“The affairs of Delaware corporations, however, must be managed by Boards of Directors, not backroom deals,” said the lawsuit, saying non-Elliott shareholders never got the opportunity to approve the features...
...The original 2018 share incentive package — worth $56bn — was struck down by a Delaware court because, it deemed, Tesla’s board was not sufficiently independent to verify it....
...Its case was serendipitously boosted by a recent Delaware court decision that said board members could not be locked into certain decisions through contracts with powerful individual shareholders....
...The Delaware judge overseeing the case, Kathaleen McCormick, said Musk controlled the board through his personality and influence, even with just a 22 per cent stake in Tesla, and the board could not demonstrate...
...Chancellor Kathaleen McCormick, who issued this week’s ruling on Musk’s pay, is set to rule shortly on a fee award to lawyers representing plaintiffs who separately sued the electric-car maker’s board members...
International Edition