[HN Gopher] The Chancellor's Excellent Questions
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The Chancellor's Excellent Questions
Author : nickcotter
Score : 42 points
Date : 2024-08-23 11:23 UTC (11 hours ago)
(HTM) web link (montanaskeptic.substack.com)
(TXT) w3m dump (montanaskeptic.substack.com)
| nickcotter wrote:
| Subtitle: The August 2 Tornetta v. Musk hearing on "ratification"
| is one for the ages.
| h2odragon wrote:
| All the reasons listed why Elon shouldn't be paid according to a
| contract he had before hand, that got re-ratified by
| shareholders, amount to "the Law should work different for people
| we don't like", no?
| sdwr wrote:
| There are plenty of situations where majority approval
| shouldn't be accepted. Matt Levine talks about one a lot, where
| a company in bankruptcy agrees to honor the claims of 51% of
| its creditors and blow off the others.
| dfhvneoieno wrote:
| Exactly. Countries don't work like _literal_ democracies of
| the 51% majority, and neither should companies.
| FabHK wrote:
| The article and its predecessors lay out the legal doctrines
| under which company CEOs can't just take whatever they want
| from "their" company.
| wrs wrote:
| > "So," asked the Chancellor, "this has never been done
| before?" After a bit more rhetorical contortion, Ross finally
| admitted that, "Yes," this has never been done before.
|
| So no, it's more like "we don't make up new law to give people
| you like whatever they want".
| deafpolygon wrote:
| "An Historic Day"
|
| Shouldn't that be "A Historic Day"?
| sandworm101 wrote:
| No. An is used before vowel sounds, not just vowels. Ive had
| this corrected many times by brits. Imho, british education is
| much more focused on speaking english than writing it, which
| changes the emphasis of some rules. But it sounds strange when
| speaking in a non-brit accent. "An istoric" v "An historic".
| brianlash wrote:
| Historic begins with a hard h consonant sound. The h isn't
| silent. "A historic" is correct.
|
| With that said, I don't personally have a problem with "an
| historic." I recognize it as a convention adopted by people
| whose dialect favors the silent h historic.
| card_zero wrote:
| 'owever, "an historic" is more historic.
|
| https://en.wikipedia.org/wiki/H-dropping#H-insertion
|
| The silent h is because words like this were originally
| French. Victorians started pronouncing the h again.
| sandworm101 wrote:
| The difference in accent in relation to the written word
| between the old and new world is tied to the geographic and
| religious histories of the two cultures. North American
| english strives to mirror spoken and written language,
| whereas the older cultures in the UK see little problem
| with such differences.
| card_zero wrote:
| In the case of _historic,_ _herb,_ etc., it 's the other
| way round.
| blitzar wrote:
| Yes it should. Sadly, some people like to butcher the English
| language, and it has become acceptable.
| InitialLastName wrote:
| Other examples of butchering the English language in this
| way:
|
| https://www.opensourceshakespeare.org/views/plays/play_view..
| .. (line 2875)
|
| https://www.opensourceshakespeare.org/views/plays/play_view..
| ..
|
| https://www.opensourceshakespeare.org/views/plays/play_view..
| ..
| card_zero wrote:
| Optionally. "Like many terms that start with a non-silent h but
| have emphasis on their second syllable, some people precede
| historic with an, others with a."
|
| https://en.wiktionary.org/wiki/historic
|
| The non-silent h (sound) is itself optional.
| skywal_l wrote:
| ELI5 anyone?
| qup wrote:
| Musk's team tried a new legal strategy and the judge didn't
| like it.
|
| The author really hates Musk.
| mrkstu wrote:
| It's really unfortunate the discursion the article took into
| ripping into Musk at a personal level- it changed the tenor
| from professional and thoughtful into a partisan attack.
|
| Its unfortunate at a larger level that the commentariat can't
| help but injecting their bias directly into things like this,
| when the facts of the story can tell you everything you need
| to know about the motivations of the people involved. Those
| facts are /weakened/ sitting alongside vituperative
| editorializing.
| jumhyn wrote:
| Honestly, I feel better if an author makes their personal
| biases known rather than try to conceal them beneath a
| facially impartial analysis. It naturally invites more
| scrutiny on the claims being made, but IMO it's more
| intellectually honest to invite that scrutiny explicitly.
| Those with an axe to grind about any given topic who are
| reasonably rhetorically capable _could_ write an ostensibly
| nonpartisan account which nonetheless leads readers to the
| authors preferred conclusion.
| mrkstu wrote:
| Maybe it's my time on staff at a college newspaper in the
| early 90s. Neutral voice reporting was drilled into us
| pretty mercilessly.
|
| When it is a pretty straightforward recounting of an
| event, just give me the facts please.
|
| Its his own site, so understandably the editorial voice
| is his to do what as he wills, but again, in the end I
| believe it undermines his own credibility with his
| readership, or at least sprinkle more of the opinionated
| voice at the beginning so I can read it in that mindset,
| rather than having to recast my view on the reporting
| post hoc.
| peterfirefly wrote:
| He has hated Musk since at least 2016 when he started
| publishing "analyses" on SeekingAlpha.com as "Montana
| Skeptic".
|
| He was very often wrong, which didn't make him hate Musk
| less.
| Veserv wrote:
| Well, when Elon Musk doxes you so he can personally call your
| boss threatening to sue you and embroil your boss in
| litigation unless you immediately cease posting articles
| unrelated to your job pseudonymously [1][2] it makes sense
| you might look unfavorably on his legal tactics.
|
| [1] https://seekingalpha.com/article/4189933-tesla-and-
| montana-s...
|
| [2] https://seekingalpha.com/instablog/37229846-montana-
| skeptic/...
| ralferoo wrote:
| The truly staggering thing about this "deal", IMHO, is that
| people were crazy enough to vote for it. Sure, you can argue a
| CEO deserves to be compensated for his work, but there has to be
| a limit on publicly owned companies. Various people have talked
| about the magnitude of the proposed payout, what's usually
| overlooked is that the figure was about 10% of Tesla's market
| cap. Effectively, Musk was trying to instigate a 10% tax on
| everybody's ownership of the company. Not 10% of profits, not
| even 10% of revenue, but 10% of everything including illiquid
| assets. That's just for one year's compensation, presumably he
| also expected similar going forward too.
|
| I cannot understand why any shareholder would vote for this
| devaluation of an asset. Not only did I vote against it, as soon
| as the vote passed and it'd somehow got a majority, I sold off
| all my directly owned shares. Sadly, I also own a lot indirectly
| through ETFs by virtue of TSLA being in S&P 500.
| dfhvneoieno wrote:
| I agree with everything else, but..
|
| > Sadly, I also own a lot indirectly through ETFs by virtue of
| TSLA being in S&P 500.
|
| this bit strikes me as a mistake. I did the calculations
| recently for this, actually, and even if you assumed that TSLA
| went to zero (which it won't; it's overvalued but its value
| isn't zero) the loss on S&P would be extremely small (don't
| remember actual numbers, but the calculation is easy to
| reproduce).
| ralferoo wrote:
| Sure, TSLA is 1.39% of the ETF I invest in. On the one hand,
| that's a low percentage, but on the other hand because I've
| investing in an S&P ETF for so long, it's significantly more
| than I'd like for a company run by a CEO I don't trust!
|
| Oh, and just to be clear, I'm not considering the case of
| TSLA going to 0. Arguably TSLA dropping by 10% isn't
| significant in the grand scheme of things as it regularly
| fluctuates by that much in a day anyway, but I'd still rather
| have less exposure to that than more.
| username332211 wrote:
| What's even crazier is that the award was basically 100% of the
| market capitalization of the company in 2018, when the deal was
| originally approved.
| twic wrote:
| Companies like Tesla are why i'm increasingly interested in
| ETFs tracking alternatively weighted indexes like RAFI:
| https://www.rafi.com/index-strategies/rafi-fundamental-indic...
| IncreasePosts wrote:
| > I cannot understand why any shareholder would vote for this
| devaluation of an asset
|
| A lot of people made a ton of money on TSLA, and they think it
| is largely due to Elon. Not because of his engineering prowess
| or whatever, but just because it became a memestock with his
| help.
| Joker_vD wrote:
| > I cannot understand why any shareholder would vote for this
| devaluation of an asset.
|
| This is why we have a kind government, whose most eminent and
| enlightened courts of justice would step in and save people
| from their own bad decisions. After all, even the TSLA
| shareholders are still human beings and should enjoy the
| protection of the law, just like any other more valuable
| citizens would.
| sva_ wrote:
| Maybe the arguments are correct, but that's some next-level ass
| kissing there
| _vaporwave_ wrote:
| I think it's clear that this was not at all an "arm's length
| negotiation" with an independent Special Committee but, at the
| same time, it's not clear that any harm was done to Tesla
| shareholders.
|
| Tesla traded up on the news that the pay package was re-approved
| by shareholders and the similar voting outcome (72% vs 73%
| originally) in light of all of this information seems to indicate
| that the shareholders genuinely want this to go through.
| nejkbnek wrote:
| Tesla traded up because there was a risk that Elon would have a
| hissy fit if the vote failed, and he would single-handedly
| destroy the company. The fact that the risk of Elon rage-
| quitting was priced in demonstrates why the vote wasn't an
| appropriate solution in the first place, the minority
| shareholders are coerced to "take it or leave it" in a way that
| corporate law is meant to avoid.
| diebeforei485 wrote:
| It is honestly ridiculous that the judge thinks she knows better
| than the shareholders.
|
| The original plan had some procedural defects, great. Levy a
| fine. But don't infringe shareholder rights to determine
| compensation, and certainly don't award billions to the guy with
| 9 shares.
| xivzgrev wrote:
| I have a lot of respect for great lawyers/judges. While they're
| saying what is essentially gibberish to me, and they're asking
| "open' questions, that build on the responses, all along they're
| slowly backing their opponent further and further into a trap
| until a dramatic finish when all is revealed.
|
| Example here
|
| The Chancellor interrupted to ask whether he could cite any case
| that permitted common law ratification of "an adjudicated breach
| of the duty of loyalty." Ross danced around the question,
| insisting that Defendants were not arguing that the vote changed
| the Court's adjudication "with respect to conduct." Blah blah
| blah, skip a bit...
|
| "So," asked the Chancellor, "this has never been done before?"
| After a bit more rhetorical contortion, Ross finally admitted
| that, "Yes," this has never been done before.
|
| Thus, with these questions, the Chancellor established that for
| her to rule in Defendants' favor, her Court of Chancery, which is
| subordinate to the Delaware Supreme Court, would be placed in the
| position of establishing a completely new legal doctrine.
|
| It's like a brilliant magic trick, if you can follow along.
| nejkbnek wrote:
| I think the Chancellor is getting at an important issue with
| simple yes/no voting as a remedy for this kind of issue.
|
| If, in 2018, Tesla had appointed a Special Committee on
| compensation which negotiated with Musk in an arms-length way
| they might have extracted a better deal. This deal would dilute
| minority shareholders less than the current 2018 deal while still
| retaining Musk as an executive.
|
| Unfortunately because the original negotiation was not done
| correctly the only options for shareholders now are "ratify the
| original deal" or "lose Musk as an executive". It's pretty clear
| to the shareholders that Musk deserves _some_ compensation, and
| that he's likely to torpedo Tesla if he doesn't get it. But
| there's no mechanism to remedy the original defect in the
| compensation plan, which is that the Board didn't actually
| negotiate on behalf of minority shareholders in good faith.
|
| If the Tesla board was trying to be compliant and respect the
| rights of minority shareholders they would craft a new, MFW-
| compliant compensation package to retain Musk. Maybe that would
| look exactly like the old package, but the mechanism of
| negotiating the package matters. It also has tax implications for
| Musk to recieve a new grant versus the old grant being ratified,
| but honestly that's his fault for not running the company
| properly in the first place.
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