"A stockholder vote standing alone cannot ratify a conflicted-controller transaction," McCormick explained, referring to her decision in January that reasoned Musk's pay package was invalid because he had too much control over Tesla and influence over the board for it to make a decision devoid of his influence.
"Even if a stockholder vote could have a ratifying effect, it could not do so here due to multiple, material misstatements in the proxy statement," McCormick added. She explained in the decision that the proxy statement issued ahead of the shareholder vote to reinstate Musk's pay package contained multiple "materially false or misleading" claims, including that it could "extinguish claims for breach of fiduciary duty" against board members.
"The Proxy Statement's multiple, material misstatements concerning the effect of the Stockholder Vote, ironically, independently bar that vote from having any ratifying effect," McCormick explained.
Additionally, McCormick ruled that Tesla's attempt to overturn the January decision had no procedural ground to stand on, given it relied on "flipping the outcome of an adverse post-trial decision based on evidence ... created after the trial," and that the argument wasn't timely, given it was "raised for the first time after the post-trial opinion."
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