Elon Musk leaves after the meeting with the premiere of the Indians Narendra Modi in Blair House, Washington, USA, USA, February 13, 2025.
Nathan Howard Reuters
The law firm, which represents Tesla and Elon Musk, wrote the proposed provisions that would change the corporate law of Delaware, according to a person directly knowing Accounting.
The proposed legislation, developed by Richards, Layton & Finger or RLF, would change Delaware General Corporation Law, and if accepted, they could pave the way to restore the Musk 2018 CEO package in Tesla, worth tens of billion dollars in options.
RLF confirmed its commitment to CNBC.
“Statutory changes are necessary to restore the basic principles, which have been the hallmark of Delaware for over a century and ensure that Delaware remains the most important jurisdiction to be turned on,” said Lisa Schmidt, president of RLF, in a statement of Lisa Schmidt.
The bill was introduced on Monday at the General Assembly in Delaware and would require the approval by two chambers of the state, as well as the governor of Matt Meyer before becoming the law.
After publishing this story, CNBC Secretary of State Delaware Charuni Patibanda-Sanchez said in the email that Gov. Meyer asked for a review of the proposed regulations and “expects to see the final product that meets the evolving needs of all our stakeholders.”
The Tesla remuneration package awarded to Musk in 2018 was the largest CEO compensation plan in corporate history, but Delaware Court of Chancery at the beginning of 2024 ordered it to be repealed.
In his ruling, Chancellor Kathaleen McCormick wrote that the remuneration plan was improperly determined by the management of Tesla, who was controlled by Musk, and that he was approved by shareholders who were misled by the materials of Proxy Tesla before they were asked to vote for him.
According to the proposed provisions, Musk may no longer be considered a “controller” of Tesla, said Brian JM Quinn, professor of law Boston College. Quinn said that transactions related to independent deprivation of controllers or directors will be subject to a smaller review than today. These transactions include private offers, for mergers and acquisitions, to decisions regarding the remuneration of management and executive.
“The real role of corporate law is the protection of minority investors,” said Quinn. “Thanks to this project, the legislator says:” Now you know what? Protect them less. “
The proposed provisions would also limit the types of documents that interested parties are able to obtain through applications for the inspection of “books and registers”, Quinn said. The stakeholders would be limited to formal items, such as the certificate of inclusion or reports of shareholders' meetings, but they would lose access to informal communication such as E -Maile or other messages between board members and management, said Quinn.
After the Court of the Chancellery, last year, Musk started a campaign to convince the companies not to join Delaware and move the incorporation place for their companies Outside. He directed his anger to McCormick with repeated and discredit posts about her in X, his social network.
Other outstanding management, including Coinbase, Brian Armstrong and Bill Ackman from Pershing Square, also criticized the judiciary Delaware.
“Delaware took up some heat that allegedly it is too difficult in controller transactions,” said Renee Zaytsev, a partner in Boies Schiller and co-chairman of the company and shareholders.
“These amendments seem to be a correction of the course, which would significantly facilitate the boards and controllers to avoid judicial review of their transactions,” she said.
Tesla and Musk did not answer the requests for comment.
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