Tesla CEO Elon Musk’s $56 Billion Pay Package Dealt Another Blow
In a major setback for Tesla CEO Elon Musk, a Delaware judge has ruled that he is not entitled to receive a $56 billion compensation package, despite shareholders voting in favor of it in June. This decision comes after the same judge, Chancellor Kathaleen McCormick, previously deemed the pay package excessive and rescinded it in January.
Shareholders’ Vote Overruled
Musk and Tesla had argued that the June shareholder vote should be recognized, and the pay package reinstated. However, McCormick disagreed, stating that the company’s board cannot simply “hit reset” to restore Musk’s compensation. She emphasized that a ratification vote like the one used by Tesla must be conducted before the trial, and a company cannot ratify a transaction involving a conflicted controller.
Musk’s Future at Tesla Uncertain
The ruling has cast uncertainty over Musk’s future at Tesla, the world’s most valuable carmaker. Musk has been instrumental in driving the company’s advances, and his departure could have significant implications for the company’s success.
Appeal Looms
Musk and Tesla can appeal the decision to the Delaware Supreme Court, which could take up to a year to resolve. Gary Black, managing partner of The Future Fund, which owns Tesla stock, believes that the higher court may overturn the ruling.
Record-Breaking Fee Award
In a separate ruling, McCormick ordered Tesla to pay the attorneys who brought the case $345 million, one of the largest fee awards ever in securities litigation.
Backlash from Shareholders
The ruling has sparked outrage among Tesla shareholders, who feel that their voices are being ignored. Many have taken to social media to express their dissatisfaction, with some arguing that the judge’s decision could lead to Musk’s departure from the company.
Musk’s Ties to Trump
The ruling comes as Musk has been tasked by President Donald Trump with creating a more efficient government by slashing spending. Musk has become a close adviser to Trump and has been instrumental in supporting his election campaign.
Tesla Shares Take a Hit
Tesla shares fell 1.4% in after-hours trade following the ruling, as investors digest the implications of the decision. The company’s stock has surged 42% since November, making the pay package worth around $101 billion.
Leave a Reply