A judge has decided not to reinstate Tesla CEO Elon Musk’s record-breaking $56 billion (£47 billion) compensation award.
Despite being authorized by directors and shareholders in the summer, the Delaware court’s ruling follows months of legal struggle.
Judge Kathaleen McCormick maintained her earlier ruling from January, in which she claimed that Mr. Musk had too much influence over the board members.
In response to the decision, Mr. Musk posted on X
“[S]hareholders should control company votes, not judges.”
Tesla promised to demand the ruling and said the decision was “wrong”.
The Company also posted and said in a post on X.
“This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners – the shareholders,”
Judge McCormick shared his opinion that the pay package would have been the largest. Tesla failed to establish the pay package, which dates back to 2018, that was also fair, she said.
Although 75% of shareholders approved the payout in June, the judge disagreed that the amount should be so high, even after referring to Tesla’s attorneys and making “creative” arguments.
She also wrote her opinion and addressed it as
“Even if a stockholder vote could have a ratifying effect, it could not do so here,”
The judge also decided that the Tesla shareholder who filed the lawsuit against Tesla and Musk should not get the $5.6 billion in Tesla shares they requested, but rather $345 million in fees.
A decision in favor of Mr. Musk and Tesla, according to some analysts, would have severely damaged Delaware’s conflict of interest regulations.
They are not just minority investors and said
“The idea of conflict rules is to protect all investors”
Mr Elson told Judge McCormick’s idea was well-reasoned.
“You had a board that wasn’t independent, a process that was dominated by the CEO, and a package that was way out of any sort of reasonable bounds,” he said. “It’s quite a combo.”
According to Mr. Elson, he anticipates that Tesla will attempt to restructure a comparable compensation package in Texas, where the business relocated its headquarters earlier this year following the pay decision.
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