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Elon Musk’s $56 Billion Pay Award Overruled
A Delaware judge has rejected the record-breaking pay award of $56 billion granted to Tesla CEO Elon Musk. The ruling upholds an earlier decision by the judge, who found that Musk’s board members were too influenced by him.
Musk had argued that shareholders should have the final say on company decisions, but the judge disagreed. Tesla vowed to appeal the decision, calling it “wrong” and stating that it would give judges and lawyers control over companies instead of shareholders.
Tesla failed to prove that the pay package, approved in 2018, was fair. The package would have been the largest ever for a listed company executive.
Musk, also the head of SpaceX and Twitter, is the world’s richest person with an estimated net worth of $350 billion.
A shareholder vote passed the pay package by 75%, but the judge ruled that the pay should not be so high despite “creative” arguments from Tesla’s lawyers.
The judge awarded the shareholder who brought the case $345 million in fees but denied their request for $5.6 billion in Tesla shares.
Experts believe that a ruling in Musk’s favor would have undermined conflict of interest laws in Delaware. The judge’s decision is considered well-reasoned, and Tesla may attempt to create a similar pay package in Texas, where it recently relocated its legal base.