The last part is an interesting argument because I don't understand the limiting principles. It would seem that any anyone who already has a lot of skin in the game can't be incentivized by more skin in the game.
It's not an interesting argument by itself, it's in conjunction:
1. The shareholders weren't aware of the lack of independence of those negotiating the deal with Musk, making the shareholder vote irrelevant
2. Because those negotiating the deal (and the board) weren't independent, it also follows that it cannot be assumed that the deal was fair
3. Because those negotiating the deal actively collaborated with Musk over setting the terms it opens a large possibility that the terms would be favourable to him
4. The deal was reasonably outlandish (compared to to other deals for CEOs), so it's hard to make the argument that a properly negotiated deal would have come anywhere close to the same level of compensation - this was hardened by the context that Musk already had significant incentive to perform.
It's impossible to know for certain that Musk would have performed if he hadn't been given 6%, but on the balance of probabilities it seems reasonable to expect that he would have performed if he'd only been given say 1%, or perhaps even nothing. The Judge has decided that a properly negotiated deal would have offered Musk less.
And of course Musk only ends up in this position of having the deal questioned because he put himself in a position where he exerts control over the board, the compensation committee _and_ didn't fully disclose these relationships to the shareholders.
I suppose the question isn't whether one would be incentivized at all by an additional grant, but whether the additional incentive would be worth the cost. Another question is whether one could get other benefits (e.g., attention/time guarantees) that may have a better return on the price.
1. The shareholders weren't aware of the lack of independence of those negotiating the deal with Musk, making the shareholder vote irrelevant 2. Because those negotiating the deal (and the board) weren't independent, it also follows that it cannot be assumed that the deal was fair 3. Because those negotiating the deal actively collaborated with Musk over setting the terms it opens a large possibility that the terms would be favourable to him 4. The deal was reasonably outlandish (compared to to other deals for CEOs), so it's hard to make the argument that a properly negotiated deal would have come anywhere close to the same level of compensation - this was hardened by the context that Musk already had significant incentive to perform.
It's impossible to know for certain that Musk would have performed if he hadn't been given 6%, but on the balance of probabilities it seems reasonable to expect that he would have performed if he'd only been given say 1%, or perhaps even nothing. The Judge has decided that a properly negotiated deal would have offered Musk less.
And of course Musk only ends up in this position of having the deal questioned because he put himself in a position where he exerts control over the board, the compensation committee _and_ didn't fully disclose these relationships to the shareholders.