Elon’s Legal Options & Byron’s Edge

elon musk
The question now isn’t whether Elon Musk punches back, but rather how, exactly, he responds to Delaware Chancellor Kathaleen McCormick’s historic decision to void his 2018 options grant as unfair to Tesla shareholders. Photo: STR/NurPhoto/Getty Images
Eriq Gardner
February 5, 2024

It’s not every day that a judge vaporizes a $55 billion executive pay package, but then again, Elon Musk is no ordinary C.E.O. The question now isn’t whether Musk punches back, but rather how, exactly, he responds to Delaware Chancellor Kathaleen McCormick’s historic decision to void his 2018 options grant as unfair to Tesla shareholders. An appeal is table stakes, and likely just the beginning of a legal saga in which Musk could countersue.

This fight wasn’t inevitable, and might have ended differently if not for a fateful, all-or-nothing decision by Musk’s lawyers. Back in 2018, when Richard Tornetta, a heavy metal drummer who owned just nine shares of Tesla stock, sued Musk for breaching fiduciary duties and unjust enrichment, the billionaire could have defended the compensation arrangement while also suggesting an alternative amount that McCormick might consider instead, if she ultimately found it necessary to blow up his employment deal. Alas, Musk’s legal team at Cravath opted against this strategy, possibly concerned about justifying a lesser 11-figure sum and providing McCormick with an easy way out.