Tesla CEO Elon Musk has lost his bid to have his record-breaking $56 billion 2018 pay package reinstated after a Delaware judge upheld her previous ruling that the compensation plan was improperly granted.
CNBC reports that in a significant setback for Tesla CEO Elon Musk, Chancellor Kathaleen McCormick of the Delaware Court of Chancery upheld her January ruling that voided Musk’s $56 billion pay package, the largest compensation plan in U.S. history for a public company executive. The judge reaffirmed that the process leading to the approval of the pay plan was “deeply flawed,” with Musk individually controlling Tesla and dictating the terms of his compensation to a board that failed to fairly negotiate.
Breitbart News previously reported on the ruling, in which the judge criticized Tesla’s “self-driving process.”
In her decision, McCormick asked: “Was the richest person in the world overpaid? The stockholder plaintiff in this derivative lawsuit says so. He claims that Tesla, Inc.’s directors breached their fiduciary duties by awarding Elon Musk a performance-based equity-compensation plan.”
McCormick continued: “In the final analysis, Musk launched a self-driving process, recalibrating the speed and direction along the way as he saw fit. The process arrived at an unfair price. And through this litigation, the plaintiff requests a recall.”
Following the initial ruling in January, Tesla conducted a shareholder vote in June at its annual meeting in Austin, Texas, asking investors to “ratify” Musk’s 2018 CEO pay plan. Musk’s attorneys attempted to persuade the judge to reverse her opinion after the trial, relying on the results of that vote. However, Chancellor McCormick rejected this argument, stating, “Even if a stockholder vote could have a ratifying effect, it could not do so here. Were the court to condone the practice of allowing defeated parties to create new facts for the purpose of revising judgments, lawsuits would become interminable.”
As part of Monday’s opinion, McCormick approved a $345 million attorney fee award for the lawyers who successfully sued on behalf of Tesla shareholders to void Musk’s pay plan. The attorneys from Bernstein, Litowitz, Berger & Grossmann, representing the plaintiff, expressed their satisfaction with the ruling, thanking the Chancellor and her staff for their hard work in overseeing the complex case.
Despite the legal setback, Musk has seen his net worth increase substantially in recent weeks. Since Donald Trump’s election victory in November, Musk’s wealth has grown by more than $43 billion, excluding the options tied to the pay package. Tesla shares have surged 42 percent in the four weeks following the election, driven by optimism that Musk’s close relationship with the incoming president will lead to favorable policies for his companies.
The value of Tesla stock Musk currently holds is close to $150 billion based on Monday’s closing price, not including his stake in SpaceX. This alone would place him among the world’s wealthiest individuals. Equilar estimates that at the current stock price, Musk’s 2018 package would have been worth $101.4 billion.
In response to the January decision, Musk criticized the Delaware court, suggesting that companies should never incorporate in Delaware. Subsequently, Tesla held a shareholder vote to reincorporate in Texas and officially shifted its state of incorporation there. Musk has also moved the state of incorporation for his defense contractor company SpaceX from Delaware to Texas.
Tesla plans to appeal the ruling, as stated in a post on Musk’s social media platform X. In a separate X post, Musk called the ruling “absolute corruption.”
Read more at CNBC here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.
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