Connect with us

BASKETBALL

Elon Musk’s pay package from Tesla, worth more than $50 billion, cannot be reinstated, a Delaware judge ordered. The judge said she would not reverse her decision to strike down the enormous compensation package, which helped make Musk the richest person in the world. Read more:

Published

on

A Delaware judge on Monday affirmed an earlier ruling that rescinded a giant pay package that Tesla had awarded its chief executive, Elon Musk.

The pay, in the form of stock options, was worth more than $50 billion and helped make Mr. Musk the richest person in the world. The package is now worth $100 billion after Tesla’s share price jumped sharply in recent weeks.

The judge, Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery, struck down the award in January, ruling that shareholders had not been properly informed of its details and that members of Tesla’s board were not sufficiently independent.

The pay comes from a 2018 award that said Mr. Musk would get all the options only if Tesla’s stock price soared and its sales and earnings grew strongly. Few expected Mr. Musk to achieve all of those targets because Tesla was still struggling to sell enough electric cars to become profitable. But Tesla’s business took off and its stock rocketed higher, allowing Mr. Musk to earn all the options in the following years. He has to hold them for five years.

The shareholder who brought the suit, Richard J. Tornetta, contended that Tesla’s board had not acted independently of Mr. Musk when devising the package and that the company had provided “materially misleading” information to investors. In her January ruling, after a trial in 2022, Chancellor McCormick said, “The process leading to the approval of Musk’s compensation plan was deeply flawed.”

To try to get the judge to change her mind, Tesla’s lawyers argued that shareholders were sufficiently informed when they overwhelmingly voted again for the package in June. But in her ruling on Monday, Chancellor McCormick wrote that the Tesla lawyers’ arguments had several flaws. Among them was that they could not hope to flip a decision “based on evidence they created after trial.”

She also said a “stockholder vote standing alone cannot ratify a conflicted-controller transaction,” referring to a situation in which a major shareholder has influence over a board and its decisions.

In any case, Chancellor McCormick said, the June vote was flawed because the board presented “materially misleading” information to shareholders in the proxy statement urging them to ratify Mr. Musk’s pay package again.
Among the “many ways in which the proxy statement mangles the truth,” she wrote, was the assurance that a new vote would change the outcome of the case.

headshot
Behind the Journalism
Our business coverage. Times journalists are not allowed to have any direct financial stake in companies they cover.
Here’s more on our standards and practices.
Tesla said on X, the social media site that Mr. Musk owns, that it would appeal the decision.

“A Delaware judge just overruled a supermajority of shareholders who own Tesla and who voted twice to pay @elonmusk what he’s worth,” the company said on its corporate account. “This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware.”

Also on X, Mr. Musk reposted comments from supporters and stated, “Shareholders should control company votes, not judges.”

Tesla’s board of directors will most likely try to fashion a new pay package that falls under the jurisdiction of Texas, where the company has since moved its corporate registration from Delaware, said Charles Elson, the founding director of the Weinberg Center for Corporate Governance at the University of Delaware.

But any new compensation award will be vulnerable to legal challenges if the board does not demonstrate more independence from Mr. Musk, Mr. Elson said. “They can always create a new package,” he said. “But they have to be very careful in the way they construct it.”
Mr. Elson praised the decision, saying a ruling in Mr. Musk’s favor “would have really changed for the worse Delaware conflict-of-interest law.”

Chancellor McCormick also ordered Tesla to pay $345 million in fees to lawyers who represented shareholders in the case. That was far less than the $5.6 billion that the lawyers had sought.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

BASKETBALL15 hours ago

Ozzy Osbourne is dead: Black Sabbath singer dies ‘surrounded by love’ aged 76

BASKETBALL1 day ago

Taylor’s father Scott had quintuple bypass surgery. Andrea, Taylor and Austin, were with him through the entire surgery and recovery process. Taylor’s rep also told the procedure was NOT the result of a heart attack, and he’s feeling just great We wish Scott health, strength and a speedy recovery.❤️💛

BASKETBALL3 days ago

Patrick Mahomes Shares 10 Cute Photos and Videos of New Baby Golden Raye with Wife Brittany and Their Other Two Children, Sterling and Bronze – but Eagle-Eyed Fans Noticed Something Strange About Golden That All Patrick’s Kids Have: “Golden Is Just Too Cute…” See more 👇👇👇

BASKETBALL3 days ago

Andy Byron, the Astronomer CEO caught in a compromising position on the Coldplay kiss cam with his HR chief, has resigned. Read more

BASKETBALL3 days ago

Travis Kelce revealed that Taylor Swift didn’t just give input-she immersed herself in crafting the restaurant menu he co-owns with Patrick Mahomes. From waking up early to taste-test dishes, to seasoning, cooking, and bonding with the kitchen staff, she embraced the role with heart and humility. Her behind-the-scenes presence as a “quiet force” surprised everyone-and…See more

BASKETBALL1 week ago

BREAKING: American Century Championship Marred by Horror as Eagles Legend Jason Kelce Sustains Severe Injury in Golf Cart Incident

BASKETBALL1 week ago

JUST IN: Taylor Swift and Selena Gomez Each Donate $1 Million to Direct Relief for Emergency Aid For Texas Hill Country Floods With Taylor Sending a Powerful Message to Donald Trump on His One Big Beautiful Bill

BASKETBALL2 weeks ago

Bruce Springsteen has stepped in to pay for the funeral expenses and compensation for the families of the victims of the devastating Texas flash floods He says

BASKETBALL2 weeks ago

BREAKING NEWS; Kansas City Chiefs Owner Clark Hunt Devastated by Tragic Loss of 9-Year-Old Relative Tania Hunt in Catastrophic Texas Floods: ‘Our Hearts Are Broken, Says Wife Read more here

BASKETBALL2 weeks ago

BREAKING UPDATE | In a news conference that started a little after 3 p.m. today, officials gave an update on the devastating flooding in the Hill Country. They now say 32 people were now confirmed dead, including 18 adults and 14 children. More stories here👇

BASKETBALL2 weeks ago

Kristi Noem has defended the Trump administration from suggestions that the delayed warning residents received during the tragic flash floods in Texas this week were insufficient. Read more here👇

BASKETBALL3 weeks ago

SAD NEWS: 30 minutes ago, Ryan Reynolds, husband of actress Blake Lively, along with her family confirmed that she had … more

Copyright © 2024 USAgets