Elon Musk’s record-breaking compensation deal struck down again by Delaware judge

A Delaware judge ruled Monday that Tesla CEO Elon Musk is not entitled to a multibillion-dollar compensation package despite shareholder approval.

Chancellor Kathleen McCormick of the Delaware Court of Chancery filed a 101-page decision on Monday. In a post by X, Tesla responded to the decision and announced its intention to appeal.

“A judge in Delaware has overturned the ruling of the supermajority of Tesla shareholders who twice voted to pay @elonmusk what he's worth,” the post reads. “The court's decision is wrong and we plan to appeal.”

“Even if this ruling is not overturned, it means that judges and plaintiffs' attorneys are running Delaware corporations, not their legitimate owners, the shareholders.”

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Mr. McCormick's ruling follows a similar ruling in January, which found that Mr. Musk's close relationships with certain board members influenced negotiations and that there was insufficient evidence that the size of the package was fair. The decision comes several months after the company canceled its remuneration agreement.

The compensation package, also known as Musk's 2018 CEO Performance Award, consists of 303 million Tesla shares. The reward was contingent on Tesla achieving certain milestones under Musk's leadership.

The closing price of a Tesla stock on Monday was about $357, meaning the package is now worth $108 billion, potentially a whopping 12-digit sum.

In his ruling, McCormick wrote that shareholders had no right to a “reset” back to the original pay package, which would lead to endless litigation.

“If courts accept the practice of allowing losing parties to create new facts in order to modify judgments, litigation will continue indefinitely,” she said.

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SpaceX and Tesla founder Elon Musk speaks at the America PAC Town Hall on October 26, 2024 in Lancaster, Pennsylvania. (Samuel Corum/Getty Images)

“A large and powerful defense industry group has brought inventiveness to the ratification argument, but their unprecedented theory runs contrary to multiple established laws.”

McCormick said in January that the pay plan is “the largest compensation plan in history and an immeasurable amount of money.” That was 33 times higher than Musk's 2012 executive compensation plan, which was the second largest executive compensation plan.

Musk previously acknowledged his legal battle over X in January.

Elon Musk (Richard Bode/WireImages/Getty Images)

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“I am uncomfortable with building Tesla into a leader in AI and robotics without having up to 25% voting control,” he wrote. “Enough to have an impact, but not so much that it can't be overturned. Otherwise, I prefer to build products outside of Tesla.”

FOX Business' Eric Revell and Reuters contributed to this report.