A judge in the US has upheld a decision to deny Tesla CEO Elon Musk a multibillion-dollar pay package despite shareholders voting to restore the compensation deal. Chancellor Kathaleen St Jude McCormick of Delaware’s Court of Chancery reaffirmed an earlier ruling to void the pay deal due to Tesla’s board being too close to Musk and not protecting shareholders’ interests.
In a 103-page opinion, McCormick stated that there was no legal precedent to reverse her ruling and allowing defeated parties to create new facts for revising judgments would make lawsuits endless. Tesla was also found to have made “material misstatements” to shareholders about the impact of their vote to reinstate Musk’s pay deal.
Following the ruling, Tesla shares dropped 1.4 percent in after-hours trading. McCormick rejected a request for $5bn in lawyer fees, granting $345m instead. Despite shareholders voting to reinstate the package, Tesla plans to appeal the decision, calling it “wrong” and claiming that judges and plaintiffs’ lawyers are running Delaware companies instead of shareholders.
Musk expressed agreement with a post calling the ruling “corrupt” and described McCormick as an “activist posing as a judge”. Under his 2018 pay deal, Musk was to be paid in Tesla stock based on reaching certain goals. The value of Musk’s compensation has fluctuated over the years based on Tesla’s stock price.
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