A Delaware Court of Chancery judge has ruled against Elon Musk’s $55 billion pay package proposed by Tesla, stating that Tesla’s board needs to devise a new proposal. The judge’s decision, if upheld through an appeal, could impact Musk’s standing as one of the wealthiest individuals globally.
Originally approved by Tesla shareholders in 2018, the pay package was contingent on Musk achieving specific milestones, including a market valuation of $650 billion. The recent trial centered on whether Musk misled shareholders regarding the plan’s origins. The judge’s decision emphasized that the shareholders were not fully informed about Musk’s role in formulating the plan and the board’s allegiance to him.
The court highlighted Musk’s significant influence over Tesla, not only through his shares but also through the composition of the board. Several board members had close relationships with Musk, raising questions about the independence of the decision-making process.
Musk, who has been advocating for more control over Tesla, recently expressed a desire to increase his ownership stake to at least 25%. This would double his current ownership of approximately 13%. Musk’s push for greater ownership awaits a ruling in the shareholder lawsuit, and he linked the delay in proposing a new compensation plan to the pending decision.
In response to the court’s ruling, Musk tweeted, “Never incorporate your company in the state of Delaware.” The decision challenges Musk’s financial future, and without the $55 billion options, he could slip in the rankings of the world’s richest individuals.
