WEBVTT - Elon Musk Defends His $55 Billion Pay Package 0:00:03.200 --> 0:00:07.960 This is Bloomberg Law with June Brusso from Bloomberg Radio. 0:00:09.240 --> 0:00:13.800 We agonize over every curve, over every detail, every corner, 0:00:14.680 --> 0:00:18.600 every element of the interior, the exterior, including things that 0:00:18.800 --> 0:00:22.479 people probably won't even notice. That was Elon Musk five 0:00:22.560 --> 0:00:26.520 years ago, presenting the first batch of Tesla electric compact 0:00:26.520 --> 0:00:31.000 cars at the company's factory in Fremont, California. These days 0:00:31.040 --> 0:00:35.080 you'll find Musk elsewhere in the state agonizing over every 0:00:35.120 --> 0:00:38.680 detail of his new acquisition Twitter. So it's a bit 0:00:38.720 --> 0:00:41.440 of unfortunate timing from Musk that he had to take 0:00:41.479 --> 0:00:45.480 the stand to defend his unprecedented fifty five billion dollar 0:00:45.600 --> 0:00:49.160 Tesla pay package at a Delaware trial this week, where 0:00:49.200 --> 0:00:53.600 a Tesla shareholder is challenging the package as too excessive 0:00:53.840 --> 0:00:57.160 for a part time CEO. My guest is an expert 0:00:57.200 --> 0:01:01.840 in corporate law, Eric Tallely, a professor at Columbia Law School. Eric, 0:01:01.840 --> 0:01:04.520 there seemed to be a lot of questions being addressed 0:01:04.520 --> 0:01:07.680 at the trial. Was the payout excessive? Did the board 0:01:07.680 --> 0:01:12.000 act appropriately independently of Musk? Is he worth the money? 0:01:12.040 --> 0:01:15.759 What are the questions that the judge has to answer 0:01:15.800 --> 0:01:18.160 to come to her decision? Well, I think there are 0:01:18.160 --> 0:01:20.480 two major questions, and there's a little bit of a 0:01:20.600 --> 0:01:24.080 rabbit hole about how Delaware law works. But the two 0:01:24.160 --> 0:01:26.600 things that are going to be really important to understand 0:01:26.959 --> 0:01:30.680 is what was the context by which the shareholders of 0:01:30.800 --> 0:01:35.640 Tesla approved this compensation package, Because it turns out that 0:01:35.760 --> 0:01:38.240 getting a shareholder vote, as long as it's a fully 0:01:38.240 --> 0:01:42.399 informed vote to approve a pay package, does a lot. 0:01:42.520 --> 0:01:44.560 It buys you a lot of real estate if you're 0:01:44.560 --> 0:01:46.760 trying to defend that pay package, but it's got to 0:01:46.840 --> 0:01:48.960 be kind of a by the book vote. And a 0:01:49.040 --> 0:01:53.520 secondarily important issue is to what extent was the anticipated 0:01:53.560 --> 0:01:57.600 size of this compensation package within the realm of kind 0:01:57.600 --> 0:02:00.480 of a reasonable amount, something that would be fair to 0:02:00.560 --> 0:02:03.720 the other shareholders of Tesla, who, after all, we're basically 0:02:03.720 --> 0:02:07.320 going to be diluting themselves a lot as these benchmarks 0:02:07.400 --> 0:02:10.000 got met and a bunch of these options got cashed 0:02:10.000 --> 0:02:12.760 out if those benchmarks got that. So that part is 0:02:12.800 --> 0:02:15.680 really going to turn on how hard was it to 0:02:15.840 --> 0:02:19.760 meet these benchmarks? Were they really almost like automatics or 0:02:19.880 --> 0:02:22.240 did they pretty much require must to work really hard 0:02:22.320 --> 0:02:24.560 to meet them, in which case, you know, if he 0:02:24.600 --> 0:02:26.679 didn't get paid that much maybe he wouldn't have worked 0:02:26.720 --> 0:02:29.600 that hard. That's the argument that Tesla is going to use. 0:02:29.639 --> 0:02:32.760 And so it turns out that the most likely applicable 0:02:32.840 --> 0:02:37.239 legal test here is gonna pivot on those two questions 0:02:37.280 --> 0:02:40.280 in kind of an inter related way. The more likely 0:02:40.320 --> 0:02:43.280 it is that the shareholders actually they knew what they 0:02:43.280 --> 0:02:45.880 were voting on, they voted with their highs wide open, 0:02:46.280 --> 0:02:48.519 the more deference the judge is going to give to 0:02:48.600 --> 0:02:51.320 the pay package. On the other hand, if the shareholders 0:02:51.360 --> 0:02:54.680 didn't know everything or felt sort of bullied or forced 0:02:54.720 --> 0:02:57.520 into this vote, then that pay package and its farness 0:02:57.639 --> 0:03:00.680 is going to get more scrutiny in court. Defending the 0:03:00.840 --> 0:03:06.000 compensation plan, Tesla directors have testified that it was important 0:03:06.000 --> 0:03:10.480 to keep Musk focused on and engaged in running Tesla. 0:03:10.800 --> 0:03:13.760 But Musk agreed with the shareholders lawyer that at the 0:03:13.800 --> 0:03:17.080 time of this pay deal, he was spending about of 0:03:17.120 --> 0:03:23.600 his time at Tesla, at SpaceX, on open Ai, boring, 0:03:23.800 --> 0:03:27.720 and neuralink. And now he testified that he's spending almost 0:03:27.760 --> 0:03:31.200 all his time reorganizing Twitter. So is he a part 0:03:31.240 --> 0:03:34.519 time CEO. Then this makes this case one of the 0:03:34.560 --> 0:03:39.640 most unprecedented executive compensation cases that we've ever seen. Quite frankly, 0:03:39.880 --> 0:03:43.440 most CEOs don't work part time at their companies. They 0:03:43.480 --> 0:03:47.080 are full time employees, and their employees who are paid 0:03:47.200 --> 0:03:50.560 well to basically put every bit of their effort and 0:03:50.600 --> 0:03:54.760 attention into the welfare of the company. Musk has always 0:03:54.800 --> 0:03:58.160 been a little bit mercurial in his habits, and in fact, 0:03:58.200 --> 0:04:00.440 they kind of knew that at the time. This was 0:04:00.520 --> 0:04:02.640 not one of these things where, you know, some of 0:04:02.640 --> 0:04:05.640 these other sideline ventures came up after the fact other 0:04:05.680 --> 0:04:08.320 than Twitter. So there was a sense in which they 0:04:08.360 --> 0:04:10.640 sort of knew they were getting a guy who had 0:04:10.720 --> 0:04:15.119 divided attentions. And weirdly enough, the rationale that Twitter had 0:04:15.200 --> 0:04:17.680 for trying to make sure this pay package at least 0:04:17.720 --> 0:04:21.600 had the potential to be heavily remunerative was that they 0:04:21.640 --> 0:04:23.800 wanted to make sure that it was attractive enough to 0:04:23.839 --> 0:04:26.359 create a honeypot to steal his attention from some of 0:04:26.360 --> 0:04:29.200 these other factors. And so it's kind of interesting that, 0:04:29.240 --> 0:04:31.240 you know, the road that we've gone down under this 0:04:31.360 --> 0:04:34.640 pay package involves Mr Musk kind of wandering off and 0:04:34.680 --> 0:04:37.040 deciding he was going to take over another company Twitter, 0:04:37.160 --> 0:04:39.680 that's not even in the space. I think that argument 0:04:39.680 --> 0:04:42.000 could cut both ways. On the one hand, the plaintiffs 0:04:42.000 --> 0:04:44.040 who were complaining about it sort of said, you know, 0:04:44.120 --> 0:04:46.279 fat load of good that did you. You know, paying 0:04:46.360 --> 0:04:49.279 him this lucrative amount, he was just gonna wander off anyway, 0:04:49.560 --> 0:04:52.080 And maybe the defendants could say, yeah, if we aired, 0:04:52.120 --> 0:04:54.320 we aired him not paying him enough to keep him 0:04:54.360 --> 0:04:57.280 on mission and on target at Tesla, that may end 0:04:57.360 --> 0:04:59.480 up being a little bit of a standoff of a tie. 0:04:59.480 --> 0:05:03.680 I think you've manufacture that argument to go in either direction. 0:05:03.800 --> 0:05:06.479 It is clear. It is clear that the way that 0:05:06.560 --> 0:05:10.520 this played out pretty much came close to the maximal 0:05:10.560 --> 0:05:13.760 payoff that he was going to get from this compensation package. 0:05:13.760 --> 0:05:16.919 It could have been north of fifty six billion dollars, 0:05:17.000 --> 0:05:19.480 just about fifty six billion dollars. It didn't end up 0:05:19.560 --> 0:05:21.760 quite being that because it didn't make all the benchmarks, 0:05:21.800 --> 0:05:23.760 but he's certainly made most of them, got the lion's 0:05:23.760 --> 0:05:26.080 share of that payoff. So if you look at it 0:05:26.080 --> 0:05:30.120 in hindsight, it just looks like a grotesquely large amount 0:05:30.200 --> 0:05:34.640 that is paid. The real operative question, however, was at 0:05:34.680 --> 0:05:37.200 the time that the grant was made, given that he 0:05:37.279 --> 0:05:40.200 wasn't taking any salary, he was only going to do well, 0:05:40.240 --> 0:05:43.520 if Tesla did well, did that make sense at the time, 0:05:43.600 --> 0:05:46.320 and did the shareholders kind of agree with it? As 0:05:46.320 --> 0:05:50.359 far as the question of whether Tesla's board acted independently, 0:05:50.839 --> 0:05:55.159 Musk testified that he had no role whatsoever in setting 0:05:55.279 --> 0:05:59.400 up this unprecedented pay package. However, in text with the 0:05:59.480 --> 0:06:03.320 board men who headed the compensation committee, Musk said he 0:06:03.320 --> 0:06:07.080 should end up owning of the company in a performance 0:06:07.120 --> 0:06:10.120 plan built around a progression of targets that would each 0:06:10.160 --> 0:06:14.440 grant him one percent of Tesla's outstanding shares. Doesn't that 0:06:14.560 --> 0:06:18.680 contradict what he testified to Yeah, there are definitely some 0:06:18.760 --> 0:06:21.680 inconsistent statements. There were some other statements of him and 0:06:21.720 --> 0:06:23.840 the record that basically sort of said, yeah, I'm kind 0:06:23.839 --> 0:06:26.720 of bargaining against myself on this, and so you know, 0:06:26.800 --> 0:06:29.719 I think it's unlikely that at the end of the day, 0:06:30.160 --> 0:06:33.799 anyone's really going to believe that he was so hands 0:06:33.800 --> 0:06:37.160 off at Tesla that the board of directors felt completely 0:06:37.200 --> 0:06:41.760 comfortable just telling him. Know, there are some important cases 0:06:41.760 --> 0:06:44.839 out there that if that's true, if you've got a 0:06:44.880 --> 0:06:47.720 board that's willing to stand up to you, then your 0:06:47.920 --> 0:06:51.640 route to defending your compensation package is even easier. Than 0:06:51.680 --> 0:06:54.520 what Elon Musk is facing right now. Because if you 0:06:54.640 --> 0:06:56.880 really have a board that has bargaining power and is 0:06:56.920 --> 0:06:59.520 willing to say no, they sign off on it, and 0:06:59.520 --> 0:07:02.520 then the careholders vote in a fully informed way to 0:07:02.600 --> 0:07:06.040 sign off on it. The case is basically done under 0:07:06.080 --> 0:07:09.440 Delaware law. And it's interesting that this case has even 0:07:09.480 --> 0:07:13.520 gotten to this point and the Tesla folks and Mosque 0:07:13.720 --> 0:07:17.480 haven't even seriously tried to argue that a truly independent 0:07:17.520 --> 0:07:20.800 board kicked the tires in a really strenuous way. I 0:07:20.840 --> 0:07:23.400 think the main thing that is important in trying to 0:07:23.480 --> 0:07:27.160 argue about, you know, just how independent the board was, is, 0:07:27.320 --> 0:07:30.720 you know, really about what were the shareholders told before 0:07:30.760 --> 0:07:34.360 they voted to approve this transaction. The plaintiffs in this case, 0:07:34.400 --> 0:07:36.520 it sort of said, yeah, the shareholders voted to approve it, 0:07:36.720 --> 0:07:38.760 so they didn't know the full story. The story that 0:07:38.840 --> 0:07:40.880 they got was that the board was really careful in 0:07:40.920 --> 0:07:43.280 working this out and in fact that the board was 0:07:43.320 --> 0:07:46.480 being led along on a leash by Elon Musk at 0:07:46.480 --> 0:07:49.760 an inaccurate disclosure of how things went down, and therefore 0:07:49.800 --> 0:07:52.840 their vote wouldn't really be a by the book vote, 0:07:52.840 --> 0:07:55.160 it would be an hunt informed vote. Formed vote. So 0:07:55.200 --> 0:07:57.720 I think that's the main reason why this has come up, 0:07:57.800 --> 0:08:00.960 not because you know, an informed and empowered board is 0:08:01.000 --> 0:08:04.000 gonna do much work in his defense, other than the 0:08:04.040 --> 0:08:07.040 fact that, you know, the plaintiffs have made an argument 0:08:07.080 --> 0:08:10.000 in trying to beat back the shareholder vote from having 0:08:10.040 --> 0:08:12.960 any effect, that the shareholders didn't know the whole story. 0:08:13.160 --> 0:08:15.920 And you know, there's kind of an interesting question there too, right, 0:08:16.120 --> 0:08:20.680 maybe TESLA is telling the shareholders and their proxy disclosures, 0:08:20.680 --> 0:08:23.280 Oh gosh, the board really used their own judgment in 0:08:23.360 --> 0:08:25.760 deciding to go forward on this, and they studied up 0:08:25.800 --> 0:08:28.920 on it, but it's kind of an open secret and 0:08:29.080 --> 0:08:32.920 everyone knows that Ellen is, you know, this incredibly powerful 0:08:33.040 --> 0:08:36.320 and influential person, and when it came right down to it, 0:08:36.400 --> 0:08:38.320 the board was going to be as weak need as 0:08:38.360 --> 0:08:40.640 anyone else. So it may be the case that the 0:08:40.679 --> 0:08:43.160 plaintiffs are right that there was this description in the 0:08:43.200 --> 0:08:46.400 proxy materials, but no one actually believed it. Everyone sort 0:08:46.400 --> 0:08:49.640 of figured, yeah, Ellen probably runs the roost on this, 0:08:49.720 --> 0:08:51.960 and we're just going to have to presume that, notwithstanding 0:08:51.960 --> 0:08:54.360 what the board is telling us or what these proxy 0:08:54.360 --> 0:08:57.080 disclosures are telling us, you know, he was probably calling 0:08:57.120 --> 0:08:59.200 the shots of the whole time, and and there may 0:08:59.200 --> 0:09:01.600 be some of that argument that comes out later on 0:09:02.160 --> 0:09:04.880 in the post trial briefing. It certainly wouldn't come out, 0:09:05.120 --> 0:09:07.120 you know, during the live trial, but that could be 0:09:07.160 --> 0:09:09.600 sort of, you know, part of the spin that that 0:09:09.720 --> 0:09:11.720 Tesla puts on it, to the extent that there were 0:09:11.800 --> 0:09:16.120 inconsistencies that come out in testimony versus what was in 0:09:16.160 --> 0:09:19.920 those proxy solicitation materials TESLAA say, yeah, but you know, 0:09:20.200 --> 0:09:22.520 no one really believed it anyway. The shareholders kind of 0:09:22.559 --> 0:09:25.959 knew that they were getting a pretty dominated company, and 0:09:26.040 --> 0:09:28.440 they were the sentry to make sure that, you know, 0:09:28.480 --> 0:09:32.840 whatever the compensation package was was okay by them. So 0:09:32.880 --> 0:09:36.400 then why did the judge allow the shareholders attorney to 0:09:36.440 --> 0:09:40.880 go into a series of questions to show that must 0:09:41.040 --> 0:09:45.720 acts with little oversight from Tesla's board. He asked about 0:09:45.800 --> 0:09:50.680 this report that Musk has some fifty Tesla employees working 0:09:50.840 --> 0:09:54.679 at Twitter, and asked whether a board member had ever 0:09:54.760 --> 0:09:57.000 called him to say it's not a good idea to 0:09:57.200 --> 0:10:01.560 use Tesla's resources for one of his private companies. So 0:10:01.920 --> 0:10:05.400 resources of a public company used for a private company. 0:10:05.480 --> 0:10:08.200 I think this was really meant by the plaintiffs, it 0:10:08.280 --> 0:10:12.600 was meant to undercut, not necessarily whether the board's decision 0:10:12.840 --> 0:10:15.880 requires legal deference or not. That's not the defense that 0:10:15.960 --> 0:10:18.280 Tess was putting up. But what they do need to 0:10:18.320 --> 0:10:21.360 be able to show is that that shareholder vote wasn't 0:10:21.440 --> 0:10:25.600 built on kind of a mountain of prevarications and fanciful 0:10:25.679 --> 0:10:29.520 yarns right that that that shareholder vote the shareholders saw 0:10:29.559 --> 0:10:32.800 the package, they saw the projections, and they received a 0:10:32.840 --> 0:10:36.120 description of what went into the structuring of that package. 0:10:36.480 --> 0:10:40.000 Part of that description did say, hey, listen, this board 0:10:40.120 --> 0:10:42.840 wasn't just like, you know, doing everything that Ellen wanted 0:10:42.880 --> 0:10:44.800 to do. They did their own study on this, and 0:10:44.800 --> 0:10:46.880 they think this is a good idea. And so I 0:10:46.920 --> 0:10:50.160 think that's the nature of the inquiry here to try 0:10:50.160 --> 0:10:54.640 to undercut or impeach the credibility of that statement that 0:10:54.679 --> 0:10:57.680 was in the disclosure to shareholders, and the plaintifts are 0:10:57.720 --> 0:10:59.840 trying to prove you know, what they told you that. 0:11:00.160 --> 0:11:01.839 But the fact of the matter is no one wanted 0:11:01.880 --> 0:11:03.640 to say no to Ellon. And here's a bunch of 0:11:03.640 --> 0:11:06.920 examples about people being too chicken to say no to 0:11:07.120 --> 0:11:09.920 Mr Musk, And so I think that's the reason they're 0:11:09.920 --> 0:11:12.280 gonna they're gonna try to use that here. It is 0:11:12.320 --> 0:11:15.400 an important thing for the plainest to do because you know, 0:11:15.440 --> 0:11:18.400 if if this shareholder vote is found by Chancellor McCormick 0:11:18.440 --> 0:11:20.840 to be, you know, kind of a fully informed and 0:11:20.880 --> 0:11:24.880 non coerced vote of the majority of disinterested shareholders, it 0:11:24.960 --> 0:11:27.800 makes the case much harder for the plaintifts to win. 0:11:27.960 --> 0:11:31.040 It doesn't eliminate the possibility, but it shifts all the 0:11:31.080 --> 0:11:34.120 evidentiary burdens onto the plaintiff, and so that makes it 0:11:34.160 --> 0:11:37.920 a much harder case because burdens, particularly in cases that 0:11:37.960 --> 0:11:41.360 are complex to have a lot of facts, burdens are tiebreakers, 0:11:41.400 --> 0:11:43.280 and if you're the one that carries the burden and 0:11:43.320 --> 0:11:48.240 the evidence is a tie, you lose. Chancellor McCormick is 0:11:48.440 --> 0:11:52.600 familiar with Elon Musk because she presided over the short 0:11:52.640 --> 0:11:56.719 lived Twitter lawsuit. At one point early in the testimony 0:11:56.840 --> 0:12:00.920 to express frustration with Musk digressing, I'm going to interrupt 0:12:01.040 --> 0:12:03.400 Mr Musk, because we can listen all day to this. 0:12:03.559 --> 0:12:06.000 It's very interesting, but I don't think it was responsive 0:12:06.040 --> 0:12:08.800 to the question, which I've now forgotten, is she the 0:12:08.840 --> 0:12:11.200 right judge for this? Because she's not putting up with 0:12:11.360 --> 0:12:15.199 any of Mousque's plays. It's a valid question to ask. 0:12:15.280 --> 0:12:17.760 The fact of the matter is a judges are people too, 0:12:17.920 --> 0:12:20.679 and be you know, a lot of this type of 0:12:20.880 --> 0:12:24.120 adjudication involves kind of a sense of the read of 0:12:24.160 --> 0:12:26.640 the room and whether the people that you're adjudicating on 0:12:26.720 --> 0:12:28.440 have a good read of the room. And by the way, 0:12:28.440 --> 0:12:30.440 I was listening in and I had forgotten the question 0:12:30.480 --> 0:12:33.040 as well, So I think he really was, you know, 0:12:33.120 --> 0:12:35.800 doing some monologue ng um in ways that a lot 0:12:35.800 --> 0:12:38.960 of witnesses do quite frankly, I don't know if you notice, 0:12:39.000 --> 0:12:42.560 But as the testimony wore on, particularly after that, Mr 0:12:42.640 --> 0:12:45.839 Musk's affect flattened. You know, a lot of his responses 0:12:45.880 --> 0:12:48.880 were sort of monosyllabic grunts that I guess I took 0:12:48.920 --> 0:12:52.160 to be yeses or knows. But he ended up, you know, 0:12:52.200 --> 0:12:55.840 being much less loquacious and much more clipped in his 0:12:55.920 --> 0:12:59.720 responses towards the end. One possibility was that he realized 0:12:59.720 --> 0:13:01.240 that he you know, he kind of didn't want to 0:13:01.280 --> 0:13:04.080 try the patients of Chance for McCormick. Now, the other 0:13:04.160 --> 0:13:07.440 thing that it's worth that's worth noting, is that Chance 0:13:07.520 --> 0:13:10.480 for McCormick didn't hear any testimony from Mr musk in 0:13:10.520 --> 0:13:13.400 the Twitter Kike, because she heard a lot from his lawyers, 0:13:13.720 --> 0:13:16.280 and she saw a lot of his tweets, and she's 0:13:16.400 --> 0:13:19.280 a lot of interviews, but he never had to appear 0:13:19.400 --> 0:13:22.000 to testify in court in front of her. And so 0:13:22.280 --> 0:13:25.160 I think, you know, it's important to realize, and lawyers 0:13:25.160 --> 0:13:27.839 and judges realized this as well, that you can become 0:13:27.880 --> 0:13:31.240 exasperated with, say the behavior of a lawyer or a 0:13:31.679 --> 0:13:36.120 legal team in front of you without necessarily that exasperation, 0:13:36.360 --> 0:13:40.120 you know, getting kind of transplanted onto the client themselves. 0:13:40.360 --> 0:13:42.480 This is a case that's been baking all the way 0:13:42.559 --> 0:13:45.920 since you know, two thousand nineteen, actually two thousand eighteen, 0:13:46.120 --> 0:13:49.240 and the factual record is long. It has not been 0:13:49.240 --> 0:13:52.440 on a rush schedule in which tempers get short and 0:13:52.600 --> 0:13:54.960 people get impatient. This has been a you know, a 0:13:55.000 --> 0:13:57.840 trial that's been coming up for years, and so on 0:13:58.000 --> 0:14:01.360 some level, I kind of feel like a cancer. McCormick is, 0:14:01.600 --> 0:14:04.360 in my view, sort of the consummate professional in in 0:14:04.440 --> 0:14:07.400 these sorts of settings and is able to separate these 0:14:07.440 --> 0:14:10.840 things from one another and be the types of cases 0:14:10.880 --> 0:14:13.680 are so different from one another that I don't, you know, 0:14:13.720 --> 0:14:15.839 I don't really think that this kind of has as 0:14:15.920 --> 0:14:18.319 much of a time as of the essence aspect as 0:14:18.360 --> 0:14:20.440 the other one was. So I think it's a little 0:14:20.480 --> 0:14:24.160 easier to achieve some form of acoustic separation between these 0:14:24.200 --> 0:14:26.480 two cases than it might be if both of these 0:14:26.480 --> 0:14:28.680 were kind of fire drill cases that were happening at 0:14:28.680 --> 0:14:31.480 the same time. This is a small thing, but I 0:14:31.560 --> 0:14:35.800 wonder if things like this hurt Musk's credibility with the judge. 0:14:36.240 --> 0:14:38.560 There was a lot of questioning about his opinion of 0:14:38.600 --> 0:14:43.560 the SEC. He had written a tweet in July saying 0:14:43.840 --> 0:14:48.000 SEC three letter acronym, middle word is Elon's. This was 0:14:48.080 --> 0:14:52.320 widely read as being vulgar and an insult to the SEC, 0:14:52.600 --> 0:14:55.360 but he claimed on the stand that it was misunderstood 0:14:55.400 --> 0:14:59.080 and really meant save Elon's company. I mean, a, I 0:14:59.080 --> 0:15:02.920 don't think anyone familiar with that particular acronym, and be 0:15:03.120 --> 0:15:06.240 the answer just doesn't seem incredible. Yeah, one's mind can 0:15:06.240 --> 0:15:08.560 cycle for the various other things that could stand in 0:15:08.600 --> 0:15:10.720 for those other two initials. And I won't give you 0:15:10.760 --> 0:15:13.400 a drum solo myself, but yeah, I think this is 0:15:13.440 --> 0:15:16.560 something that he loves to do. He loves to do 0:15:16.640 --> 0:15:21.360 the slightly juvenile, coy kind of word puzzled type of thing, 0:15:21.480 --> 0:15:24.840 and I think that judges can lose their patients with that. 0:15:25.040 --> 0:15:28.560 You know, it's interesting that probably the Twitter case in 0:15:28.680 --> 0:15:33.400 many respects may have laid bare at least one realization that, 0:15:33.480 --> 0:15:36.200 you know, messing around with the Delaware courts. You know, 0:15:36.240 --> 0:15:38.200 you think of this is just a state court system. 0:15:38.200 --> 0:15:41.520 It's nothing compared to the SEC. But the Delaware courts 0:15:41.520 --> 0:15:44.520 are a special breed. They are sort of the business 0:15:44.520 --> 0:15:47.520 court of the United States on some level. And I 0:15:47.520 --> 0:15:50.640 think on some level of the outcome of the Twitter case, 0:15:50.720 --> 0:15:54.000 in which after putting up a big protestation thinking he 0:15:54.080 --> 0:15:56.640 was going to bend gravity to walk away from that deal, 0:15:56.920 --> 0:15:58.960 he ended up closing on its original terms. And I 0:15:58.960 --> 0:16:00.520 think that might have been a large part because of 0:16:00.520 --> 0:16:04.400 the credibility of the court system. And so, yeah, would 0:16:04.440 --> 0:16:07.680 you like to walk that thing back? Probably would, at 0:16:07.720 --> 0:16:09.240 least to the extent that it was going to be 0:16:09.280 --> 0:16:11.600 presented in front of Chancellor McCormick. But I think at 0:16:11.600 --> 0:16:14.480 the time he really didn't realize that the Delaware state 0:16:14.480 --> 0:16:17.880 court system is pretty professional and they're probably not to 0:16:17.920 --> 0:16:20.720 be trifled with on some level. Now I will also 0:16:20.840 --> 0:16:24.240 say that this particular case, I was never much of 0:16:24.240 --> 0:16:27.360 a fan of Mr Musk's position in that earlier case. 0:16:27.400 --> 0:16:29.240 I just thought it was a it was a case 0:16:29.240 --> 0:16:33.600 of buyer's remorse, and he was drastically and desperately looking 0:16:33.640 --> 0:16:35.840 for escape hatches to get out of, but none of 0:16:35.880 --> 0:16:38.400 them was a very good escape hatch. This is a 0:16:38.480 --> 0:16:41.160 stronger case for him. If I were posting odds on this, 0:16:41.240 --> 0:16:43.440 I think it's quite likely he's going to win this case, 0:16:43.560 --> 0:16:46.280 in large part because you know, there is this shareholder 0:16:46.360 --> 0:16:50.000 vote out there the extent of failed disclosures. They're gonna 0:16:50.040 --> 0:16:51.960 have to, you know, show a pretty strong case to 0:16:52.040 --> 0:16:55.000 undercut the validity of that shareholder vote. And then, in addition, 0:16:55.440 --> 0:16:58.920 you know, a lot of corporate law deals with sticks 0:16:58.960 --> 0:17:01.760 with liability. Stick. If you do this, CEO, we're going 0:17:01.800 --> 0:17:04.159 to punish you by forcing you to pay damages and 0:17:04.200 --> 0:17:08.520 so forth when it comes to compensation. It's effectively the 0:17:08.560 --> 0:17:11.160 other side of the sticks. It's the company is also 0:17:11.200 --> 0:17:13.359 sort of saying, Okay, those sticks are doing some work, 0:17:13.720 --> 0:17:15.359 but we want to do a little bit more work 0:17:15.400 --> 0:17:18.639 with some carrot to fine tune those incentives of our 0:17:18.720 --> 0:17:22.040 CEOs and our board members and courts over the years, 0:17:22.320 --> 0:17:25.679 I think probably appropriately has said, yeah, we're probably not 0:17:25.720 --> 0:17:27.800 getting it right for all companies when it comes to 0:17:27.840 --> 0:17:29.800 the sticks. So we're going to give them a little 0:17:29.840 --> 0:17:31.919 bit of deference when it comes to trying to figure 0:17:31.960 --> 0:17:34.960 out how they're gonna situate their carrots on the other 0:17:35.000 --> 0:17:37.240 side of those sticks. And you know, it may well 0:17:37.280 --> 0:17:40.040 be that Tesla overpaid. It may well be that its 0:17:40.040 --> 0:17:43.240 shareholders voted in a foolish way to permit this thing 0:17:43.280 --> 0:17:46.160 to go forward. But if the shareholders were fully informed, 0:17:46.200 --> 0:17:48.080 they knew that what they're getting into, they knew that 0:17:48.119 --> 0:17:51.280 they could be heavily deluded later on, it's a much 0:17:51.359 --> 0:17:54.560 more defensible case for Mr Musk sort of say, yeah, 0:17:54.600 --> 0:17:57.000 and I accepted on that basis, and you know, on 0:17:57.000 --> 0:17:59.159 some levels, for the same reason that I kind of 0:17:59.200 --> 0:18:02.399 had to go through with the Twitter purchase, Testla should 0:18:02.440 --> 0:18:05.200 have to go through with this contract that they after 0:18:05.280 --> 0:18:08.320 all agreed. Now the shareholders, there at least the plaintiffs, 0:18:08.359 --> 0:18:11.359 they're having buyer's remorse, but you know, they voted to 0:18:11.440 --> 0:18:13.520 agree to pay me this, and so I think there 0:18:13.640 --> 0:18:15.960 is kind of an interesting aspect in this case. The 0:18:16.040 --> 0:18:18.480 law is not identical of course, but the tables are 0:18:18.520 --> 0:18:21.280 a little bit turned that now. Mr Musk is the 0:18:21.280 --> 0:18:24.359 person that's sort of saying, let's enforce this contract has written, 0:18:24.760 --> 0:18:27.800 and it's the test LA shareholders that are saying, let 0:18:27.840 --> 0:18:30.880 us walk away from this contract. Thanks. Eric. That's Columbia 0:18:30.960 --> 0:18:37.320 Law School professor Eric Tally, a Republican e o C commissioner, 0:18:37.480 --> 0:18:42.240 is deploying a rarely used agency procedure to silently initiate 0:18:42.280 --> 0:18:47.280 a discrimination investigations against at least three companies providing their 0:18:47.280 --> 0:18:51.679 employees with abortion travel benefits. That's according to five attorneys 0:18:51.680 --> 0:18:55.120 who have seen the charges, joining me as J. Edward Moreno, 0:18:55.359 --> 0:18:59.040 an employment discrimination reporter at Bloomberg Law who wrote the 0:18:59.040 --> 0:19:04.320 exclusive story. How rare are these charges coming from commissioners directly? 0:19:05.000 --> 0:19:08.320 These commissioners charges e o C commissioners, which there are 0:19:08.359 --> 0:19:12.120 five of them, are able to file them independently. They're 0:19:12.240 --> 0:19:15.440 typically used very rarely. In the past two fiscal years, 0:19:15.480 --> 0:19:18.000 they've only been used three times. We still don't have 0:19:18.119 --> 0:19:21.200 the data for this past fiscal year. But they're typically 0:19:21.280 --> 0:19:26.560 used to push settled law or add claims to existing investigations, where, 0:19:26.840 --> 0:19:30.199 for example, if somebody file the charge with the e 0:19:30.280 --> 0:19:32.680 O C because they believed they were discriminated on the 0:19:32.720 --> 0:19:35.159 basis of race. The and the e o C finds 0:19:35.200 --> 0:19:37.840 that the employer was also discriminating on other grounds, they 0:19:37.840 --> 0:19:40.879 can file a commissioners charge to add a claim to 0:19:40.920 --> 0:19:44.919 that investigation that the victims didn't necessarily make. And so 0:19:45.000 --> 0:19:48.680 tell us about these charges you learned about that. We're 0:19:48.760 --> 0:19:54.080 brought by Republican Commissioner Andrea Lucas. E o C Commissioner 0:19:54.640 --> 0:19:58.720 Andrea Lucas, who is appointed by President Trump in has 0:19:58.760 --> 0:20:01.480 filed these commissioners charge, which is against at least three 0:20:01.520 --> 0:20:05.760 companies um alleging that they're discriminating against pregnant employees and 0:20:05.840 --> 0:20:11.160 disabled employees because they're offering they're allegedly offering um abortion 0:20:11.200 --> 0:20:15.119 travel benefits, but not benefits for other medical procedures. What 0:20:15.200 --> 0:20:18.960 I don't quite understand is what other procedures are they 0:20:19.040 --> 0:20:22.800 claiming need travel benefits. Women are getting travel benefits to 0:20:22.840 --> 0:20:25.720 travel out of state because in state they can't get 0:20:25.760 --> 0:20:29.240 an abortion. So what is Lucas claiming here that there 0:20:29.240 --> 0:20:32.960 are disabled workers and pregnant workers who need to go 0:20:33.000 --> 0:20:36.159 out of state for procedures and they can't. Yeah, So 0:20:36.280 --> 0:20:38.679 it's unclear from the charges. They're very brought. They just 0:20:38.720 --> 0:20:42.159 make those two assertions that the company is discriminating against 0:20:42.200 --> 0:20:45.359 pregnant workers and that it's discriminating against disabled workers. So 0:20:45.400 --> 0:20:47.879 the facts of these cases are not yet established. The 0:20:48.000 --> 0:20:53.000 investigations are still ongoing, but the charges make the assumption that, 0:20:53.240 --> 0:20:56.679 for example, somebody with maybe a complicated pregnancy at that 0:20:56.720 --> 0:20:59.199 company or at any of these companies, was maybe not 0:20:59.280 --> 0:21:03.560 able to travel to see a specialist, or a person 0:21:03.600 --> 0:21:07.080 with a disability was not able to travel to seek 0:21:07.119 --> 0:21:11.000 the care that they needed. Meanwhile, these companies were offering 0:21:11.480 --> 0:21:14.600 travel for abortions. As you mentioned, you know, it is 0:21:14.640 --> 0:21:18.040 a little unusual because abortion is unique in that it 0:21:18.119 --> 0:21:19.960 depending on where you are, you may not have access 0:21:19.960 --> 0:21:23.760 to that anymore. Where with pregnancies or other conditions, those 0:21:23.800 --> 0:21:27.240 services are generally offered locally or you know, if not 0:21:27.400 --> 0:21:30.480 in the general vicinity of where you're working. It's also 0:21:30.680 --> 0:21:32.920 unusual in the from the attorneys that I talked to 0:21:33.040 --> 0:21:36.440