Key Ruling Upheld
Tesla CEO Elon Musk’s attempt to reinstate his 2018 CEO pay package, valued at $56 billion, has been denied by a Delaware court. On Monday, Chancellor Kathaleen McCormick upheld her January ruling, declaring the compensation plan improperly granted and the result of a flawed approval process.
Why It Matters
The package, the largest in U.S. history for a public company executive, had been voided earlier this year after McCormick determined that Musk controlled Tesla’s board and influenced the terms of his pay plan without fair negotiation.
Shareholder Vote Rejected
In June, Tesla shareholders were asked to ratify the pay package during the company’s annual meeting in Austin, Texas. Musk’s legal team argued that this vote justified reinstating the plan. However, McCormick rejected this, stating, “Even if a stockholder vote could have a ratifying effect, it could not do so here.”
Legal Costs and Fallout
McCormick also approved $345 million in attorney fees for the legal team that successfully challenged the compensation package. Bernstein, Litowitz, Berger & Grossmann, the firm representing the plaintiffs, praised the court’s decision, stating it avoided “injecting continued uncertainty into court proceedings.”
Musk's Response and Next Steps
Musk denounced the ruling as “absolute corruption” in a post on his platform, X (formerly Twitter). Tesla plans to appeal the decision. Following the January ruling, Tesla moved its state of incorporation from Delaware to Texas after a shareholder vote. Musk has similarly relocated the incorporation of his defense company, SpaceX, to Texas.
Financial Impact on Musk
Despite this legal setback, Musk’s net worth has soared. Tesla stock has jumped 42% in recent weeks, boosting Musk’s wealth by $43 billion. His Tesla holdings alone are worth nearly $150 billion, excluding the voided pay package. If the 2018 plan had remained intact, it would now be worth an estimated $101.4 billion.
What’s Next
Tesla’s appeal of the court’s decision is expected to prolong the legal battle. Meanwhile, Musk’s financial influence and ongoing shifts in corporate strategy suggest his broader plans remain unaffected by the ruling.
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