Way to miss the point of our modern market system. We all have skin in the game. That is, it is to the benefit of all of us that not only contracts are enforced but that they are above board legally
What an asinine take on the whole thing
The basic problem is that the negotiation was not between two parties, but rather between one party and his sock puppet:
Perhaps the issues involved would be clearer to you if we substitute “teachers’ union” for “Elon”, “city council” for “board”, and “doorknocking and donations in the next reelection campaign” for “tight relationship”.
There’s a tradeoff between accuracy and clarity. Provide the big picture and you get a lot of clarity, which will generally be inaccurate. Because reality is an accretion of details. Provide a lot of little details and you lose clarity, you miss where they point.
Ideologues pretend the details all fall on their half of the divide. Analysts characterize mixed evidence. (Fanatics can’t tell the difference.)
Back to the business columnist Matt Levine. In this case, most but not all of the details are in a 201 page legal opinion: Levine doesn’t whine about its length.
Instead, Levine provides a (humorous) capsule summary of the interactions between Musk, his private companies, his public company (Tesla, which is the largest of his holdings and the subject of this lawsuit), his directors, and his shareholders. Which is fairly clear, though not wholly accurate.
Tesla is a public company, which means that, even if 99% of shareholders love him, if 1% of shareholders don’t, they can sue. They can say: “Look, the board has a fiduciary duty to manage the company on behalf of all shareholders. Giving Musk a giant golden statue of himself is not necessary, or a good business decision, or fair to the shareholders; it’s just the controlling shareholder fulfilling his own whims with corporate money, and an ineffective board of directors giving him whatever he wants. He should have to give it back.” …And then a judge will get to decide whether the deal was fair to shareholders or not, and if it was not, the judge can make Musk pay the company back. Even if the board, and 99% of the shareholders, want him to keep it!
So that’s part of the big picture argument. Fairly clear, somewhat inaccurate. Levine fills in a detail in the footnote (actually a lot of the holders of Tesla are index funds). Then, broad picture introduced, he provides finer brush strokes: “The actual analysis [of Judge McCormick’s opinion] is more complicated than my sketch above; there are four parts”. I’ll summarize Levine’s summary:
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Usually judge’s defer to the board of directors on executive pay decisions (business judgment rule). But there’s an exception when the CEO is a “Controlling shareholder”, which the court decided applies to Musk.
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But! Judges won’t review such decisions if they win a shareholder vote, which Musk did. “But! The plaintiffs here argued, and the judge agreed, that the shareholder vote was not “fully informed,” “because the proxy statement inaccurately described key directors as independent and misleadingly omitted details about the process.”” So now the fairness standard applies.
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So was it a fair process? Not really: one director said that he didn’t consider negotiations for this precident shattering pay package to be, “An adversarial process”. Snort.
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Was it a fair price? “Tesla’s board of directors decided that it would be worth paying Musk $55 billion if he took Tesla’s value from $59 billion to $650 billion.”
Then Levine spends a few paragraphs discussing point 4.
Does Levine have biases and opinions? Sure. But he’s a reality based commentator so his take is at least shaped by the underlying facts, which he isn’t afraid to present. Along with 15 footnotes. This type of presentation beats the usual pattern recognition from 30,000 feet aka the vibes of thing.
Pretty sure that the reason we use the courts to settle contract disputes is that they are an impartial third party who was not part of the original deal and who has no skin in the game.
Reminds me of the time Jeff Sessions was mad at a judge in Hawaii and called it something like “an island in the middle of the Pacific,” as if that somehow impeached the legitimacy of the extremely normal and proper process that the judge had been a part of.
Thank you for this quality post (in the pit, no less)
Yeah, seconded. Excellent work.
j
@Sam_Stone, this point has been brought up several times in this part of the discussion. Do you care to address it? The cavil about who has “standing” to question the legitimacy of the contract appears to have been played out.
The Verge spent $900 to have the Musk testimony copied, and published it all for our benefit.
Skip down to the cross-examination for a lot of amusing bits. There are lots of moments like this, as Musk is suddenly fighting to say he’s less in control of Tesla than he previously said:
Q. So you were the person who came up with the vision; is that the answer?
A. I have long wanted to do electric vehicles from when I was in college. At Stanford, my graduate studies at Stanford would have been focused on energy storage technologies for electric vehicles. So my interest in electric vehicles goes back to when I was practically in high school.
Q. Maybe I could get you — you understand the words “yes” and “no” or “I don’t know,” right, you understand those three alternatives? Were you the person who came up with the vision for Tesla, yes or no?
A. I believe you are asking complex questions that are not — where “yes” or “no” is not possible, but “yes” is more accurate than “no.” But your question is a complex question that is commonly used to mislead people.
Q. Well, let’s just dispel any complexity from it. We’ll take a look at your deposition in this case. Page 34, lines 14 through 16, counsel. Let me try that again.
(A video clip was played as follows:)
Q: Who generated or who came up with the mission or vision of the company?
A: I did.
Q. You were asked that question, gave that answer at your deposition; is that right, sir?
A. Yes.
Thanks. The central insights aren’t original to me. Patrick McDermott taught me the tradeoff between accuracy and clarity. My martial arts instructor provided the teaching tip of starting with broad brush strokes, then adding finer ones. I struggle with that.
The contrast between ideologues, analysts, and fanatics is mine, but it was inspired by the opinionated but still useful analysis in the Economist magazine. MfM-GPT: that’s me.
Q. Anyone review your tweet attacking the San Francisco office of the SEC before you made it, sir?
A. I — no, I don’t think so.
Q. And am I correct that the consent decree that you entered into with the SEC provided that you would not “take any action or permit to be made any public statement denying, directly or indirectly, any allegation in the complaint or creating the impression that the complaint is without factual basis.” Do you recall that as one of the obligations in the consent decree?
A. The consent decree was made under duress, so I believe that —
Q. I — we can get to that. I just want to know whether you recall that as an obligation.
A. An agreement made under duress is not valid as a foundation of law.
Q. Okay. Can you tell me whether you know — are you trained as a lawyer?
A. I have some familiarity with the legal system.
Q. I suspected that might be the answer. You know, once upon a time, you could read the law and become a lawyer. Even in Delaware, it was not so long ago that you didn’t actually need a law degree. So maybe you’re on your way.
A. I mean, if you’re in enough lawsuits, you learn a — you pick up a few things along the way.
Q. There you go. Well, putting aside the lack of bar admission, anyway, perhaps legal training is there, but the bar admission isn’t, I just want to know whether you’re aware of this obligation. I don’t really want to hear about what you think about it. I just want to understand whether you’re aware of the obligation, yes or no.
Q. You’re also co-founder of something called The Boring Company. Is that true?
A. Yes.
Q. You lead that company?
A. No.
Q. No?
A. No.
Q. That’s interesting, because your counsel in this case and my side, both sides, sat down and came up with certain facts we agree to for purposes of the case, and we put that together in something called a pretrial order. And what you’ll find in the very first tab of your book is something titled “Stipulation and [Proposed] Pre-Trial Order.” I want to go, if I can, to paragraph 58 of that. And let’s take a look together at what your counsel stipulated to. You can read it along with me. It appears to read “58. Musk leads The Boring Company.” Have I read that correctly?
A. Umm.
Q. Have I read that correctly?
A. Yes.
Q. So I’ll represent to you, sir, that’s stipulated as fact for purposes of this trial.
The whole point of accepting a consent decree is that it’s an alternative to facing criminal and/or civil liability. I suppose that means it’s “under duress” if you think that having to obey the law and live up to your contracts constitutes “duress”, but that’s not how rational people define the term.
Wow! Way upthread, I posted a tiny snippet of Elmo’s testimony that suggested he was a fucking moron making asinine arguments. So it seems that this was a mere water droplet compared to the fire-hose of further evidence of that fact! 
Fake News! The real Elmo would have objected to the use of the word ‘tweet,’ he spent $43 billion to be able to change the name of them to ‘xeets.’ So clearly this was just a sham trial conducted with a clone of Elmo to make him look like a buffoon.
In other news, we all know how easy it is to buy a Twitter Blue account and have a username to deliberately impersonate someone else. But surely there are checks in place at Twitter to prevent any rando with $1,000 to burn from buying a Twitter Gold account to impersonate another corporation in order to sell fraudulent NFTs, right? Right?
Q. In fact, your tweet about sleeping at Twitter said you intended to continue to do so until the org was fixed, meaning the organization. Right?
A. Yeah, which I expect that to be probably this week, end of this week.
(Elon deleted that tweet about sleeping at Twitter, but here’s what it said: “I’ve been at Twitter SF HQ all night. Will be working and sleeping here until org is fixed.”)
Q. We’ve heard you’re terribly bad at predicting things.
A. Well, my record varies. Sometimes it’s accurate; sometimes it’s not.
Q. You think you’ll be able to fix Twitter in a week or so?
A. No. I think the fundamental organizational restructuring will be done at the end of this week.
Fox Newz sez that if the Bidencrats can come for Elmo’s illegally-gained $55 billion salary, they can come for your illegally gained $55 billion salary next!
Q. You know, the funny thing is the way this works is if I ask a complex question, you’ve got a lawyer here who is very well renowned, he’s an excellent lawyer, he’s well paid — I assume he’s well paid, anyway — who will stand up and say, objection, Your Honor, compound question. And then Her Honor will make a ruling. But he hasn’t done that. So would you be so kind as to answer my question?
Sounds like Elmo decided to put his testimony into Dunning-Kruger Overdrive
This may have been explained already, but what, if there is one, is Elon’s purpose in trying to downplay his involvement in leading these companies?