A Delaware judge ruled on Monday that Tesla CEO Elon Musk is not entitled to receive a multibillion compensation package despite shareholders approving it.
Chancellor Kathaleen McCormick of Delaware’s Court of Chancery filed her 101-page decision on Monday. In an X post, Tesla responded to the decision and expressed intent to appeal.
“A Delaware judge just overruled a supermajority of shareholders who own Tesla and who voted twice to pay @elonmusk what he’s worth,” the post read. “The court’s decision is wrong, and we’re going to appeal.”
“This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners – the shareholders.”
MUSK AND RAMASWAMY LAY OUT DOGE VISION IN WSJ OP-ED: 5 TAKEAWAYS
McCormick’s ruling comes months after she previously struck down the same compensation deal in January, finding that Musk’s close relationships with certain board members influenced negotiations and that there was no adequate proof that the size of the package was fair.
The compensation package, also called Musk’s 2018 CEO Performance Award, would consist of 303 million shares of Tesla stock. The compensation was contingent on Tesla meeting certain milestones under Musk’s leadership.
The closing price of a single Tesla stock was roughly $357 on Monday, meaning that the package could now be worth $108 billion, a whopping 12 figures.
In her decision, McCormick wrote that stockholders were not entitled to “hit reset” to restore the original pay package and that doing so would lead to endless litigation.
“Were the court to condone the practice of allowing defeated parties to create new facts for the purpose of revising judgments, lawsuits would become interminable,” she said.
SEN. ERNST SENDS LETTER TO MUSK, RAMASWAMY DETAILING AREAS WHERE DOGE CAN CUT SPENDING
“The large and talented group of defense firms got creative with the ratification argument, but their unprecedented theories go against multiple strains of settled law.”
In January, McCormick said the pay package was the “biggest compensation plan ever – an unfathomable sum.” It was 33 times bigger than the next largest executive compensation package, which was Musk’s 2012 compensation plan.
Musk previously acknowledged the legal battle on X in January.
“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control,” he wrote. “Enough to be influential, but not so much that I can’t be overturned. Unless that is the case, I would prefer to build products outside of Tesla.”
FOX Business’ Eric Revell and Reuters contributed to this report.
Read the full article here
