A Delaware judge ruled Monday that Tesla CEO Elon Musk is still not entitled to $56 billion compensation package Despite the electric vehicle company’s shareholders voting to reinstate it.
The decision by Chancellor Kathleen McCormick, a Court of Chancery judge, follows her January ruling that the pay package was excessive and canceled itThe move surprised investors, and created uncertainty over Musk’s future at the world’s most valuable carmaker.
Musk did not immediately respond to an emailed request for comment.
Tesla said in court filings that the judge should recognize a June vote by its shareholders in favor of a pay package for Musk, the company’s driving force who is responsible for much of the company’s progress, and restore his compensation. .
McCormick also ordered Tesla to pay $345 million to the lawyers who took the case. Far less than the $6 billion they initially requested.,
Shareholders also flooded the court with thousands of letters, arguing that the January decision increased the likelihood that Musk would leave Tesla or develop some products, such as artificial intelligence, at ventures other than Tesla.
Attorney for shareholder Richard Tornetta, who filed the lawsuit in 2018 Challenge Musk’s compensation Package had argued that Delaware law does not allow a company to use a ratification vote to essentially overturn a trial decision.
McCormick in January found that Musk improperly controlled the 2018 board process to negotiate pay packages. The board had said that Musk deserves this package because he has achieved all the ambitious targets of market value, revenue and profitability.
But the judge criticized Tesla’s board as “indebted” to Musk and said the compensation plan was proposed by a board whose members had a conflict of interest because of their close personal and financial relationships.
Following the January decision, Musk posted a video on his social media platforms.
The judge called the pay package “the largest compensation plan ever made – an unfathomable sum” in his January ruling. This was 33 times larger than the next largest executive compensation package, which was Musk’s 2012 pay plan.
Musk’s 2018 pay package gave him a stock grant worth about 1% of Tesla’s equity each time the company achieved one of 12 steps of incremental operational and financial goals.
Musk did not receive any guaranteed salary. Tornetta argued that when shareholders voted on the package they were not told how easily the targets would be achieved.
