Judge nullifies Elon Musk’s $56 billion Tesla salary package
January 31, 2024
A Delaware judge on Tuesday invalidated Tesla CEO Elon Musk’s $56 billion (€51.1 billion) compensation package, siding with a shareholder who claimed the businessman was overpaid.
A judge called the compensation an “unfathomable amount” that was not fair to shareholders, according to a court document.
The electric carmaker’s shares fell more than 3% in after-hours trading after the 200-page decision was released.
What was the process about?
Chancellor Kathaleen McCormick’s decision comes more than five years after a shareholder lawsuit targeted Tesla CEO Musk and the company’s directors.
They were accused of violating their duties to the electric vehicle and solar panel maker, resulting in wasted corporate assets and unjust enrichment for Musk.
Shareholder lawyers argued that the compensation package should be voided because it was dictated by Musk and was the product of fraudulent negotiations with directors who were not independent of him.
What did the judge say?
Musk’s salary package at Tesla is the largest in corporate America. The judge concluded that it was traded by directors who appeared to be linked to its headline-grabbing CEO.
“Swept away by the ‘all perks’ rhetoric, or perhaps fascinated by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan really necessary for Tesla to retain Musk and achieve its goals? ” McCormick wrote.
Its decision could be appealed once the parties reach agreement on a final order and the shareholder’s attorneys’ fees, which will be paid by Tesla.
Source: DW
Lori Barajas is an accomplished journalist, known for her insightful and thought-provoking writing on economy. She currently works as a writer at 247 news reel. With a passion for understanding the economy, Lori’s writing delves deep into the financial issues that matter most, providing readers with a unique perspective on current events.