Tesla

It's highly uncertain whether Tesla shareholders will benefit, but the shareholders of other tech companies may benefit from the signal the decision sends about acceptable compensation policies.

Tesla's stratospheric stock value depends on the belief that Musk will deliver magic, not selling cars. The package was not cash today, but options granted before stock rose, reward for performance. Denying ex ante maybe, but ex post welching on deals is not good.

Tesla stock down 2% in the after hour trading following the news, which suggests that a cut in executive pay is not necessarily good news for equity holders.

The option grant was designed to induce Musk to drive the market value of Tesla equity to a much higher level. Now that he (arguably) has done that, the shareholders (other than Musk) are being given a windfall gain by voiding the options.

The number seems large, but I don't know how one can tell if it is too large.

A 2% drop in the stock price doesn't seem like a big deal - so not "substantial". What is more interesting is Tesla potentially moving incorporation to Texas. Currently, Delaware has near monopoly over corporate registrations. Competition is on the way.

Governance at Tesla seems problematic.

Tesla shareholders voted in favor in 2018. Stock dropped when opinion was announced indicating a loss of value. Will be a distraction if not value destroyer going forward.

The greatest potential benefit to shareholders would be if this caused Tesla to improve its overall corporate governance. However, at this point that does not seem likely.

There's the direct effect of the renumeration, but then there's the indirect effect of the signal from the event. Not clear what the net effect will be.

Even if the process of awarding the pay package was flawed, as the court seems to have argued, this does not mean that the award was in conflict with the interests shareholders. The stock price also didn't move much, so likely a non-event for shareholder value.

The Delaware court, with more information than us, voided the pay based on existing protections for minority investors against conflicted boards & deceptive disclosures, helping investors in Tesla (& all US stocks). Mature Tesla may be better without Musk but that is irrelevant.

Absence a friction, courts intervening into market outcomes tend to make people worse off.

This corresponds to 9.5% of stock market capitalization, but more importantly, the court has pointed the finger to board members who are too close to management, highlighting conflict of interest. I think this is a useful warning

Judging by Tesla's stock-price reaction to the decision (down slightly), stockholders do not perceive a benefit. I would not argue otherwise.

Maybe some of the incentive effects (to the extent there are any) have happened already.

Redistribution from entrenched shareholder to diffuse shareholders. signals better corporate governance. Reduce impact of erratic behavior of one large shareholder on entire company.