Tornetta v. MuskAnnotate this Case
The Court of Chancery denied Defendants' motion to dismiss breach of fiduciary duty claims brought by a Tesla, Inc. stockholder against Telsa's chief executive officer, Elon Musk, and members of Tesla's board of directors regarding a stockholder vote approving an incentive-based compensation plan for Musk, holding that, on the pled facts, it was reasonably conceivable that the award was unfair.
After approving the award, the Board submitted the award to Tesla's stockholders for approval. The stockholders approved the award, after which Tesla implemented the award. Thereafter, Plaintiff brought direct and derivative claims against Musk and members of the Board alleging that the award was excessive and the product of breaches of fiduciary duty. Defendants moved to dismiss the complaint. The Court of Chancery denied the motion, holding (1) entire fairness is the standard by which the award must be reviewed; and (2) under the circumstances of this case, Defendants' motion to dismiss the breach of fiduciary duty claims must be denied.