A Delaware judge ruled on Monday that Tesla CEO Elon Musk is still not entitled to receive a $56bn compensation package, despite a favorable shareholder vote six months ago. Chancellor Kathaleen McCormick of the court of chancery declared the pay package excessive and rescinded it in January, causing uncertainty over Musk’s future at the company. The decision also ordered Tesla to pay the attorneys who brought the case $345m.
Tesla argued that a subsequent shareholder vote in June in favor of the pay package should reinstate Musk’s compensation, citing his importance to the company’s success. The pay package, originally devised in 2017, was structured around Musk meeting specific revenue and market targets. The approval of the package in June was met with enthusiasm by Musk, who shared his gratitude at a Tesla event.
Musk has criticized Chancellor McCormick in the past and urged business owners to avoid Delaware due to unfavorable rulings for companies. Despite moving Tesla’s headquarters to Texas, the pay package case continued under the Delaware judge. McCormick previously found that Tesla’s board had conducted a flawed process in determining Musk’s payment, highlighting personal conflicts and close ties to Musk within the board.
The judge’s latest ruling maintains the uncertainty surrounding Musk’s compensation and his future at Tesla, as shareholders and the company’s board continue to navigate the legal challenges surrounding the CEO’s extensive pay package.
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