Every American has a right to be critical of Mr. Trump’s politics—one of us ran against him in 2016—or Mr. Musk’s public persona. But equality before the law is precious, and these rulings represent a crisis not only for the soundness of our courts, but for the business environment that has allowed the U.S. to prosper. If these rulings stand, the damage could cascade through the economy, creating fear of arbitrary enforcement against entrepreneurs who seek public office or raise their voices as citizens in a way that politicians dislike.
In Delaware, Chancellor Kathaleen McCormick of the Court of Chancery ordered the unwinding of five years of Mr. Musk’s incentive-based compensation at Tesla, which had been approved by 80% of the company’s shareholders. The plaintiff, Richard Tornetta, held nine shares in 2018—worth about $200 then and $2,000 today, after the execution of the compensation plan that supposedly injured him.
Mr. Musk’s compensation plan awarded him stock bonuses tied to earnings and stock-value benchmarks, which many critics thought he could never meet. When he did, he received $56 billion, enriching shareholders like Mr. Tornetta along the way. Judge McCormick has yet to say how she wants the pay package unwound, but Mr. Tornetta’s lawyers could petition her for a percentage of the $56 billion as a fee for having succeeded in their challenge. Mr. Musk’s performance at Tesla enriched all shareholders, but Judge McCormick’s ruling may primarily enrich Delaware trial lawyers.