A law firm that serves as legal counsel for Tesla and its CEO Elon Musk has drafted legislation that would make changes to Delaware corporate law, as per a source familiar with the bill’s development. The proposed changes, put forth by Richards, Layton & Finger (RLF), seek to amend the Delaware General Corporation Law and, if enacted, could lead to the reinstatement of Musk’s lucrative 2018 CEO compensation package at Tesla, valued at billions of dollars in options. RLF confirmed their involvement in the process to CNBC. “It is imperative to enact statutory modifications to uphold the fundamental principles that Delaware has upheld for more than a century and to ensure that Delaware remains the top jurisdiction for corporate incorporation,” stated Lisa Schmidt, RLF’s president. The bill was presented in the Delaware General Assembly and would need approval from both legislative chambers and Governor Matt Meyer to become law. Musk’s sizable 2018 pay package, the largest in public corporate history, was nullified by the Delaware Court of Chancery in early 2024. Chancellor Kathaleen McCormick ruled that the compensation plan had been inappropriately set by Tesla’s board, which was under Musk’s control, and that shareholders were misled by the company’s proxy materials prior to voting on it. Legal expert Brian JM Quinn of Boston College Law suggested that under the proposed legislation, Musk may no longer be categorized as a “controller” of Tesla. Transactions involving conflicts of interest with controllers or directors would undergo reduced scrutiny compared to the current standards. These transactions encompass a wide range, from going-private deals to mergers, acquisitions, and decisions on board and executive compensation. Quinn emphasized that the primary role of corporate law is to safeguard minority investors, and the bill could potentially weaken that protection. The proposed legislation would also restrict the scope of information that minority stakeholders could access through “books and records” requests, limiting them to formal documents like a certificate of incorporation or minutes of stockholder meetings, while excluding informal communications like emails between board members and executives. Following last year’s court ruling, Musk initiated a campaign urging companies not to incorporate in Delaware and shifted the incorporation site of his businesses out of the state. He directed criticism at Chancellor McCormick through disparaging remarks on X, his social platform. Other high-profile executives, including Coinbase CEO Brian Armstrong and Pershing Square’s Bill Ackman, have also voiced discontent with the Delaware judiciary. Renee Zaytsev, partner at Boies Schiller and co-chair of the firm’s securities and shareholder dispute practice, noted that the proposed amendments appear to be a corrective measure to ease the scrutiny on board and controller transactions. Tesla and Musk did not provide comments in response to requests for input.
Restaurants in the private business sector have raised concerns about a slow start to the first quarter. However, they remain optimistic that sales will see an improvement as we progress through the rest of the year.
