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A Delaware judge has ruled in favor of Tesla investors who challenged a $56 billion compensation package. Tesla CEO Elon Muskthe court filing showed.
“This decision boldly steps “where no one has gone before, at least where no Delaware court has gone before,” the opinion states. “A series of characteristics that characterized Mr. Musk’s relationship with Tesla and its directors gave Mr. Musk significant influence over Tesla.”
In their decision, the judges stated that “plaintiffs have the right to rescind,” and they submitted a joint letter to discuss the form of the final order implementing the decision and specify all necessary issues, including fees. instructed both parties to do so. It needs to be addressed to end the matter at the court level. The decision may be appealed to the Delaware Supreme Court.
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| TSLA | Tesla Inc. | 191.59 | +0.66 | +0.35% |
He added that Tesla “certified that shareholders were sufficiently informed to vote because the proxy statement inaccurately described key directors as independent and misleadingly omitted details about the process.” I couldn’t do it,” he added. As a result, the company was left with “the unenviable task of proving the fairness of the largest potential compensation plan in public market history,” even though it had a talented team of attorneys. “It turned out to be an impossible task,” she said.
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A Delaware judge has ruled that the compensation package for Tesla CEO Elon Musk was approved without sufficient information given to minority shareholders. (Photo by Michael M. Santiago/Getty Images / Getty Images)
Tesla and Musk’s agreement This is by far the highest compensation ever given to a business executive, and is a key factor in making him one of the world’s richest individuals. The deal would allow Musk to buy Tesla stock at a deep discount as he achieves his financial and operational goals, but would require him to hold the shares for five years.
Musk was eligible to meet all 12 tranches, or performance targets, of the compensation plan, but his salary was not guaranteed.
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Tesla CEO Elon Musk posted on X about the ruling, saying, “Never set up a company in Delaware.” (Photo by Omar Marquez/Getty Images/Getty Images)
The company discussed in one discussion 1 week trial Tesla’s payment was to ensure that one of the world’s most dynamic entrepreneurs remained focused on the electric car maker. Antonio Gracias, who served on Tesla’s board from 2007 to 2021, said the package led to the company’s extraordinary success and called it a “great deal for shareholders.”
The judge noted that Gracias is a member of Musk’s compensation committee, has a long-standing business relationship with Musk, and is personally close enough to have vacationed with the billionaire’s family.
Tesla’s board of directors announced this, according to a lawyer for plaintiff investor Richard Tornetta. never told shareholders The goal was easier to achieve than the company realized, with internal projections showing Musk on track to qualify for the bulk of his pay package.
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Tesla’s success has earned CEO Elon Musk a significant portion of his wealth. (Photo credit: Smith Collection/Gado/Getty Images / Getty Images)
They also said Tesla’s board would be obligated to offer a smaller salary package or find another CEO to work at Tesla full-time rather than allow Musk to take on other projects. He argued that he should have requested that.
Musk acquired social media company Twitter in 2022, renamed it to X last year, and has launched several other startups, including: Brain implant company Neuralinktunnel-boring venture Boring Company and commercial space company SpaceX.
In response to the ruling, Mr. Musk wrote to X: “Never establish a company in Delaware.”
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Following the ruling, Tesla shares fell as much as 3.6% in after-hours trading. Shares have fallen more than 22% since the beginning of the year after automakers predicted slower growth in 2024.
This ruling will focus attention on the next round of compensation negotiations between Tesla and Mr. Musk. He recently said he would be reluctant to expand Tesla’s AI-related business without owning 25% of the company’s voting rights. At the time of his comments in mid-January, Musk owned about 13% of the company’s stock.
Tesla did not immediately respond to a request for comment.
Reuters contributed to this report.
