A judge has ruled that Elon Musk cannot keep his US $55 billion Tesla salary
A Delaware judge decided on Tuesday that Elon Musk is not entitled to the historic remuneration package that Tesla’s board of directors awarded him, which could be valued up to US$55 billion ($83.6 billion).
The decision made by Chancellor Kathleen St Jude McCormick was made more than five years after Tesla CEO Elon Musk and the company’s board became the targets of a shareholder complaint.
They were charged with violating their obligations to the manufacturer of solar panels and electric cars, which led to the wastage of company funds and Musk’s unfair gain.
The compensation package, according to the shareholder’s attorneys, should be void since Musk controlled it and it resulted from fictitious talks with directors who were not impartial.
Additionally, they claimed that shareholders who received inaccurate and deceptive disclosures in a proxy statement accepted it.
Defense lawyers argued that the compensation plan was approved by a shareholder vote that was not even necessary in Delaware law, that it was fairly negotiated by an independent compensation committee, and that it included performance targets so high that some Wall Street investors mocked them.
Additionally, they contended that since Musk at the time owned less than one-third of the business, he was not a controlling stakeholder.
An email requesting comment from a counsel representing Musk and the other Tesla defendants was not immediately answered. However, Musk responded to the verdict on his owned social media network X, which was once known as Twitter, by giving advise to businesses.
Later, he said, If you would rather have shareholders make decisions, you could incorporate in Nevada or Texas.
Musk, who tops Forbes’ list of the richest persons in the world as of Tuesday, had pushed Tesla’s board earlier in the month to devise a new compensation scheme that would have given him a 25 percent share in the business.
Musk, who now owns 13% of the company, said during an earnings call last week that while he can’t run the business, a 25% share would give him significant influence.
During his trial in November 2022, Musk refuted claims that he set the details of the compensation package or went to any sessions where the board, its compensation committee, or a working group that contributed to its development addressed the proposal.
Musk would only be eligible to receive the entire $84.8 billion compensation plan benefit if he could steer Tesla to a $988.3 billion market capitalization and record-breaking sales and profits in less than ten years.
According to a January post-trial brief filed by the plaintiff’s counsel, Tesla has achieved all twelve market capitalization benchmarks and eleven operational milestones, giving Musk almost $42.5 billion in stock option profits.
During the trial, the defense lawyer Evan Chesler claimed that Musk and Tesla stockholders benefited from the remuneration package, which was a high-risk, high reward arrangement.
The Austin, Texas-based company’s worth surged from $80.5 billion to over $1.2 trillion following the plan’s implementation, having previously surpass $1.5 trillion.
Chester added that Tesla wanted shareholders to be aware this was a heart-stopping number that Mr. Musk could earn which is why the firm made sure the $83.6 billion compensation figure was disclosed in the proxy statement.
