www.reuters.com/business/autos-transportation/elon-musk-won-56-billion-payday-because-vote-tesla-argues-court-2024-06-27/
Elon Musk won $56 billion payday because of vote, Tesla argues in court
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Based on the original decision, it seems that according to Delaware law that kind of analysis does not begin and end with the shareholder vote. A valid previous shareholder vote would have shifted the burden of proof of showing Elon's pay package was unfair to Tornetta, rather than Tesla needing to prove Elon's pay package was fair. If you assume this vote is valid and simply replaces the previous vote that would seem to be all the legal effect this new vote would have.
And at that point one would need to look at the rest of the analysis - whether Tornetta could show that the pay package is not "entirely fair". The entire fairness standard requires looking at whether the process and the price was fair, but I'm not sure whether Tornetta would need to show both elements are unfair or just one. I could imagine a not-unreasonable argument that the process was unfair. An unfair price seems harder to prove.
And that leaves out all the fascinating arguments that are sure to come up around whether this vote is valid. Wouldn't be too surprised if this case drags out a while longer.
Of course, I'm not a lawyer, let alone a business law specialist, so take this comment with an appropriate amount of salt.
If both parties (shareholders and CEO) agree, it’s fair by definition. If you think something about the process was unfair, then it’s clear that the second time around this was fully understood or understandable by the shareholders, who still approved it.
If both parties (shareholders and CEO) agree, it’s fair by definition.
I think some care needs to be taken here with respect to what "fair" means. Your statement might work in a more colloquial context, but in my comment "fair" is in the context of the "entire fairness" standard in Delaware law, where it has a fairly specific meaning that doesn't quite match more colloquial understandings. As described by the Delaware Supreme Court:
The concept of fairness has two basic aspects: fair dealing [a.k.a., fair process] and fair price. The former embraces questions of when the transaction was timed, how it was initiated, structured, negotiated, disclosed to the directors, and how the approvals of the directors and the stockholders were obtained. The latter aspect of fairness relates to the economic and financial considerations of the proposed merger, including all relevant factors: assets, market value, earnings, future prospects, and any other elements that affect the intrinsic or inherent value of a company’s stock.
So in this context, both parties agreeing to a transaction does not automatically render a deal fair; that is just one part of a broader analysis.
To emphasize Delaware's particular meaning of "fair", there's also the fact that in this particular set of circumstances (a conflicted-controller transaction where the MFW factors were not all met), the entire fairness standard applies automatically and all a shareholder vote does on its own is shift the burden of proof, rather than changing the standard of review to something that is much more deferential to the company.
If you think something about the process was unfair, then it’s clear that the second time around this was fully understood or understandable by the shareholders, who still approved it.
As described above, properly informing shareholders before they vote is just one part of the fair process analysis, so even if one assumes that the second vote with its additional disclosures is sufficient the (alleged) issues with initiation, structure, negotiations, and Board approval don't seem to be going anywhere. Whether those remaining (alleged) issues would be sufficient to keep the previous conclusion of the entire fairness analysis remains to be seen, but it's a not-unreasonable argument for a finding of an unfair process.
I think some care needs to be taken here with respect to what "fair" means.
There doesn't need.
Retail investors have trivial way to express disatisfaction with any decision being made in a company. Sell (in this case at a profit), and buy something else where you actually agree with the decisionmaking.