In a groundbreaking move on Tuesday, Delaware’s Court of Chancery, under the leadership of Chancellor Kathaleen McCormick, made headlines by rescinding Elon Musk’s staggering $56 billion compensation from Tesla. Known for her calm demeanor and high standards for corporate behavior, McCormick has a history of taking on powerful figures in the corporate world.
As the first woman to lead Delaware’s Court of Chancery, a key player in U.S. corporate litigation, McCormick has established herself as a force to be reckoned with. Prior to the Musk case, she dealt with Twitter’s lawsuit against Musk in July 2022 when he attempted to break his $44 billion contract to acquire the social media platform. McCormick, recognizing the need to protect the company and shareholders from uncertainty, expedited the case, leading Musk to adhere to his initial agreement.
McCormick’s reputation for being soft-spoken, intelligent, and amiable stands in stark contrast to Musk’s occasionally brash and volatile behavior. Charles Elson, a retired University of Delaware professor, emphasized her resilience, stating, “She’s met a lot of people like him in private practice. He’s not going to intimidate her.”
Having defended her court against conservative critics and safeguarded the interests of smaller investors, McCormick has a track record of holding CEOs accountable. In a notable case last year, she found Rick Stollmeyer guilty of shortchanging shareholders of Mindbody Inc. through a manipulated cut-price sale. This commitment to protecting shareholder rights continued in 2021 when she ordered a buyer to proceed with a corporate takeover despite claims of insufficient financing.
Notably, McCormick is unafraid to challenge legal practices that she deems dubious. In a move to protect investors, she slashed legal fees by over 90% for attorneys involved in a questionable lawsuit on behalf of Magellan Health shareholders, stating, “Where lawsuits are not worth much, plaintiffs’ counsel should not be paid much.”
With opinions often exceeding 100 pages, McCormick adds flair to her rulings with quotes from Julia Childs and insights from college football legend Knute Rockne, from whom she draws inspiration. Her journey began with the Delaware branch of the Legal Aid Society, where she helped low-income individuals navigate the legal system. Eventually entering private practice with a top corporate law firm, she emphasized the importance of logic and reason over ego in dealing with challenges in both business and life.
The recent Musk ruling, though taking an unusually long time for the Court of Chancery, reflects McCormick’s commitment to a thorough and fair legal process. In a world where corporate giants often wield significant influence, Chancellor Kathaleen McCormick emerges as a steadfast guardian of justice, undeterred by intimidation and resolute in upholding the principles of fairness and accountability.