Tesla CEO Elon Musk’s $56 Billion Pay Package Bid Rejected
Tesla CEO Elon Musk faced a significant setback as a Delaware judge rejected his bid to reinstate his 2018 CEO pay package worth about $56 billion. Chancellor Kathaleen McCormick upheld her previous ruling that the compensation plan was improperly granted, making it the largest compensation plan in U.S. history for a public company executive. Musk’s attorneys tried to persuade the judge to reverse her decision, but she stood firm in her opinion.
Legal Battle
The legal battle unfolded after Tesla conducted a shareholder vote to “ratify” Musk’s pay plan at the company’s annual shareholder meeting in Austin, Texas. Despite Musk’s efforts to sway the judge in Delaware’s business court, Chancellor McCormick concluded that even a stockholder vote could not rectify the situation. As a result, she approved a significant $345 million attorney fee award for the lawyers who represented Tesla shareholders in voiding the pay plan.
Reaction and Future Steps
In response to the ruling, Musk expressed his frustration on social media, advising others to avoid incorporating their companies in Delaware. The company later held a shareholder vote to reincorporate in Texas, officially making the shift in June. While Musk can appeal the decision to the Delaware Supreme Court, Judge McCormick emphasized the importance of upholding judgments without allowing defeated parties to manipulate facts to their advantage.
Financial Impact
Despite the legal setback, Musk’s net worth has seen a significant increase in recent weeks, excluding the value of the disputed pay package. His wealth has surged by over $43 billion since the recent election, with Tesla shares rising by 42% following the news. With his Tesla stock alone valued at close to $150 billion, Musk’s financial standing places him among the world’s wealthiest individuals.
As Musk navigates the legal and financial implications of this ruling, the future of his compensation and Tesla’s corporate structure remains uncertain. The outcome of any potential appeals and Musk’s ongoing interactions with the legal system will undoubtedly shape the trajectory of his career and the company he leads.
