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Tesla – Post-Trial Decision Re Stockholder Vote, Attorney Fees [pdf]

3 点作者 _hl_5 个月前

1 comment

_hl_5 个月前
I encourage anyone to read the (surprisingly plain-english) first few pages of the decision, but here is the gist of it:<p>&gt; In January 2024, the court issued a post-trial opinion finding that the award was subject to review under the entire fairness standard [...] the defendants bore the burden of proving entire fairness, they failed to meet their burden, and the plaintiff is entitled to rescission. [...] The defendants responded by putting the rescinded compensation plan [...] to a stockholder vote for the stated purpose of &#x27;ratifying&#x27; it. [...] The defendants then moved to &#x27;revise&#x27; the post-trial opinion based on the stockholder vote, asking the court to flip its decision.<p>&gt; The motion to revise is denied. [...] The large and talented group of defense firms got creative with the ratification argument, but their unprecedented theories go against multiple strains of settled law. [...] First, the defendants have no procedural ground for flipping the outcome of an adverse post-trial decision based on evidence they created after trial. [...] Second, common-law ratification [...] cannot be raised for the first time after the post-trial opinion. [...] Third, [...] a stockholder vote standing alone cannot ratify a conflicted-controller transaction. Fourth, [...] material misstatements in the proxy statement [defeat the ratification]. Each of these defects standing alone defeats the motion to revise.<p>&gt; The fee petition is granted in part. The plaintiff’s attorneys asked for $5.6 billion in freely tradeable Tesla shares. [...] That was a bold ask. [...] Delaware courts award fees based on a percentage of the value of the benefit achieved [...] yet [...] a fee award &#x27;can be so large that typical yardsticks [...] must yield to the greater policy concern of preventing windfalls to counsel.&#x27; [...] $5.6 billion is a windfall no matter the methodology used. [...] To reach a reasonable number, this decision [...] uses the $2.3 billion grant date fair value to value the benefit achieved. [...] Applying a conservative 15% to that figure results in a fee award of $345 million—an appropriate sum to reward a total victory.