Musk’s $56 Billion Pay Package Dealt a Blow
In a significant setback for Elon Musk, a Delaware judge has upheld her previous ruling that the Tesla CEO’s 2018 compensation package, worth a staggering $56 billion, was improperly granted. This marks a major defeat for Musk, who had attempted to reinstate the package.
A “Deeply Flawed” Process
Chancellor Kathaleen McCormick initially voided the pay plan in January, citing that Musk had exerted significant control over Tesla and dictated the terms of his compensation to a board that failed to negotiate fairly. The process leading to the approval of the pay plan was deemed “deeply flawed.”
Tesla to Appeal
Tesla has announced plans to appeal the ruling, with Musk taking to social media platform X, which he owns, to express his discontent. He labeled the ruling “absolute corruption.” However, McCormick remains unmoved, stating that even a shareholder vote cannot retroactively validate the flawed process.
Attorney Fees Approved
As part of the ruling, McCormick approved a substantial $345 million attorney fee award for the lawyers who successfully sued on behalf of Tesla shareholders to void Musk’s pay plan. The lawyers hailed the decision, praising the Chancellor and her staff for their tireless efforts in overseeing the complex case.
A Shift in Incorporation
Following the January decision, Musk criticized the Delaware court, advising against incorporating companies in the state. Tesla subsequently held a shareholder vote to reincorporate in Texas, which was successful. Musk has also relocated the state of incorporation for his defense contractor company SpaceX from Delaware to Texas.
Musk’s Net Worth Soars
Despite the legal setback, Musk’s net worth has surged significantly in recent weeks, excluding the options tied to the pay package. His wealth has increased by over $43 billion since the US presidential election, driven by a 42% rise in Tesla shares. The value of the Tesla stock he still holds is estimated to be around $150 billion, cementing his position among the world’s wealthiest individuals.
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