The Delaware Chancellor who again struck down Elon Musk‘s unprecedented $55.8 billion
Tesla compensation package
on December 2 is renowned for her composed nature and stringent corporate governance standards.
After Chancellor
Kathaleen McCormick
rejected the compensation motion, the Tesla company took to his account on X and said that if the ruling is not overturned then it means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners.
“A Delaware judge just overruled a supermajority of shareholders who own Tesla and who voted twice to pay @elonmusk what he’s worth. The court’s decision is wrong, and we’re going to appeal. This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners – the shareholders,” Tesla said.
Reacting to Tesla’s post one of the user said on X, “Delaware judge Kathaleen McCormick blocks Elon Musk’s effort to restore Tesla’s compensation package, going against the board and 72% of shareholders. Last time I checked, companies should prioritize shareholders’ interests, not judges’ decisions.”
Chancellor McCormick’s verdict on Musk’s remuneration follows her previous rulings against a private equity organisation attempting to abandon an acquisition and a chief executive who undervalued his company during its sale, Reuters reported.
As the first female leader of Delaware’s Court of Chancery, the primary venue for American corporate disputes, McCormick has previously encountered Musk in legal proceedings.
She presided over Twitter’s lawsuit against Musk in July 2022 when he attempted to withdraw from his $44 billion acquisition agreement. She dismissed his delaying strategies, and just before an expedited October trial, he proceeded with purchasing what is now called X.
The judge expedited the Twitter case to safeguard the organisation and its shareholders from harmful uncertainty. However, the Musk compensation ruling took notably longer for a court known for swift judgments in complex cases. The week-long non-jury pay trial concluded in November 2022.
McCormick, known for her intellectual prowess and affable demeanour, stands in contrast to Musk’s occasionally confrontational personality.
“She’s met a lot of people like him in private practice,” Charles Elson, a retired University of Delaware professor, who filed a brief in the case arguing Musk’s pay was unfair. “He’s not going to intimidate her.”
She has defended her court against conservative critics from the former Trump administration whilst protecting smaller investors’ interests.
In 2023, she made a groundbreaking ruling finding Rick Stollmeyer had disadvantaged Mindbody Inc shareholders through a manipulated low-price sale to his preferred buyer.
In 2021, she ordered Kohlberg & Co to complete their £550 million DecoPac Holding Inc acquisition, joining a select group of judges who have mandated reluctant buyers to finalise corporate takeovers.
She has also protected investors from excessive legal representation costs. In July, she reduced legal fees by over 90% for solicitors who filed questionable litigation regarding Magellan Health shareholders.
“Where lawsuits are not worth much, plaintiffs’ counsel should not be paid much,” she wrote.
Her detailed judgments often exceed 100 pages, incorporating quotes from Julia Childs and wisdom from Notre Dame football legend Knute Rockne, where she obtained her law degree.
McCormick began her career at Delaware’s Legal Aid Society, later transitioning to corporate law at Young Conaway Stargatt & Taylor for financial reasons.
“They taught me a form of advocacy that appealed to my natural inclination,” she told the senate, explaining that challenges in business and life are best addressed “not with ego, but with logic, and reason, and open minds.”