Judge Kathaleen McCormick's ruling highlighted significant governance flaws in Tesla's $56bn pay package for Elon Musk, critiquing the misleading processes and relationships involved.
The initial award was found to be a governance 'abomination' as key independent directors had close relationships with Musk, undermining the negotiation process.
Despite shareholders voting in favor of Musk's pay package after a second vote, McCormick maintained her position, asserting that the board's actions raised serious legal concerns.
McCormick's concern rests on the principle that if defeated parties are allowed to create new facts, it could lead to endless, burdensome litigation.
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