Judge Invalidates Musk's $55B Tesla Pay Package, Highlighting "Deeply Flawed" Approval Process

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  • Source: Wayne Dupree
  • 01/30/2024
Elon Musk wrote on X on Tuesday, "Never establish your business in the state of Delaware," after the cancellation of a $55 billion Tesla pay plan by a Delaware Chancery Court judge. According to CNBC, Judge Kathaleen McCormick ruled in a shareholder case that the Tesla board of directors had not shown the "fairness" of the CEO remuneration plan. In a 2018 vote, shareholders accepted the package, but McCormick said that the procedure was "seriously defective." According to the AP, the shareholder complaint claimed that Musk personally oversaw Tesla, set the compensation schedule, and got permission from directors who were not impartial.

The Verge adds that McCormick claimed that a business statement "misrepresented important directors as independent and misleadingly withheld specifics about the process," resulting in a shareholder vote that was not "fully informed." Musk became the wealthiest person on the globe in part because of the greatest compensation package in business history, which included incentives to reach goals. The court noted that Musk initiated "a self-driving procedure, recalibrating the speed and direction along the way as he deemed appropriate," and that he had "deep links with the personnel charged with negotiating on Tesla's behalf."

"Confer on a form of final order implementing this judgment," the court instructed the parties. The complaint was launched five years ago, but according to the New York Times, it gained "added relevance" when Musk bought Twitter in 2022. Tesla's share price plummeted as a result of Musk's apparent distraction from his new acquisition, despite the compensation package's purported goal of keeping him focused on the company.


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