Delaware Judge Kathleen St. J. McCormick received a blow on social media when he criticized Elon Musk’s multibillion-dollar Tesla Inc. was blocked for the second time, highlighting the pressure that comes with delivering a verdict against the world’s richest man.
Musk posted “absolute corruption” on Other supporters of the billionaire labeled McCormick’s decision “insane.”
McCormick, chief judge of the Delaware Chancery Court, is a longtime expert in dealing with the Musk-related backlash. When he first canceled Musk’s pay package in January on the grounds that Tesla’s board was too beholden to him, he received a sharp response from critics in both online posts and letters to his chambers. Similarly in 2022 when McCormick refused to let Musk back out of a $44 billion deal to buy X’s predecessor, Twitter.
‘amped up’
While judges routinely decide thorny legal issues, those decisions become more complex when they involve some of the richest and most powerful figures in the corporate world, said a Columbia University law professor who focuses on corporate litigation. Eric Talley said. “These types of cases are particularly rampant,” he said.
McCormick and Musk did not respond to requests for comment Tuesday.
Musk’s influence has reached new heights and his net worth has increased since the US presidential election as he is considered a close confidant of Donald Trump.
The stock option package was initially valued at $2.6 billion and grew to $56 billion by the time a judge struck it down in January. The package was worth $101.5 billion at Monday’s closing price. Tesla shares fell 1.6% on Tuesday.
With 206 million followers on X, Musk regularly relies on his Internet megaphone to whip his fans, including many of Tesla’s retail investors, into a frenzy. Scores of X users, including many using anonymous handles, expressed their anger at McCormick for denying Musk the largest pay package ever given to a corporate executive.
‘in jail’
“He needs to stay in jail,” a user named Not Jerome Powell wrote in a post, referring to the judge.
Musk warned that McCormick’s decision would lead to a business exodus from Delaware, the corporate home of nearly two-thirds of Fortune 500 companies.
The serial entrepreneur has moved to incorporate Tesla, his rocket company SpaceX, and other businesses in Texas, where he hopes to take advantage of more lax regulations and a new business-court system.
While McCormick is taking heat for her decision, she is also drawing praise from some legal commentators for not bowing to pressure over her conclusion that Tesla’s board had a conflict of interest in deciding Musk’s pay appropriately. It was too much.
courage, honesty
“In her decision regarding Musk, she has shown great courage and integrity in not backing down,” said Jill Fish, a professor at the University of Pennsylvania Law School.
Ann Lipton, a corporate law professor at Tulane University, said McCormick’s decision was consistent with Delaware law and reinforced the idea that Musk should be treated the same as other corporate owners.
“Many of Musk’s supporters and fans believe that corporate managers like him should not be reined in,” Lipton said. Being the first female chief justice in chancery, McCormick is also a high-profile target, she said.
Wedbush analyst Daniel Ives said in a note to investors that McCormick’s decision is not a surprise and may not be the final decision on Musk’s pay. Tesla has already said it plans to appeal.
“It remains a soap opera running in Delaware.”
The case is Tornetta v. Musk, 2018-0408, Delaware Chancery Court (Wilmington).
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
