Elon Musk has slammed a Delaware judge over an “absolutely crazy” ruling that denied him a payout now worth $100 billion. He denounced the move as “absolute corruption”.
Musk responded to the ruling handed down by Court of Chancery Judge Kathleen McCormick on Monday on his social media platform X. The Tesla mogul accused the judge of being an “activist masquerading as a judge” for defying more than 70% of shareholders who voted for approval in June. compensation package.
McCormick, who was appointed chancellor by Democratic Delaware Governor John Carney, upheld a previous decision in January to void Musk's pay package, which was valued at $56 billion at the time.
A judge initially ruled that Tesla's board was unduly influenced by Musk during negotiations and that the compensation was excessive.
In June, Tesla shareholders voted to reinstate Musk's pay package at the company's annual meeting.
That same month, Tesla fulfilled its pledge to leave Delaware and reincorporate in Texas, but Musk's lawyers assured the Delaware Chancery Court that it would continue to have jurisdiction over compensation issues. did.
But McCormick on Monday refused to change his previous position.
“While a large and powerful group of defense companies brought ingenuity to the ratification argument, their unprecedented theory violates multiple established laws,” she wrote in her decision.
Tesla said it plans to appeal the ruling. Wedbush analyst Dan Ives said: predicted that the company would win And Mr. Musk will get paid.
Ives called the McCormick decision “another Twilight Zone legal move,” adding, “As the battle continues, I expect Tesla and Musk to prevail in the Supreme Court.”
“A judge in Delaware has reversed the ruling of the supermajority of shareholders who own Tesla and voted twice to pay @elonmusk what he's worth,” the company said in a post on X.
“Even if not overturned, this ruling means that judges and plaintiffs' attorneys are running Delaware corporations, not the shareholders, who are the rightful owners.”
McCormick's ruling sparked a backlash not only from Musk but also from Tesla bulls and business leaders, who accused her of overstepping her bounds.
“Judge McCormick is the worst activist judge of all time,” Cathie Wood, founder and CEO of ARK Invest and a major shareholder in Tesla, wrote about X.
“Judges do not have the right to determine CEO compensation. Shareholders voted twice to approve @elonmusk’s 2018 performance-based pay package, overwhelmingly approving it each time. We will lose this battle in court.”
Paul Graham, co-founder of venture capital firm Y Combinator, writes about X: That will no longer be the case if activist judges start overruling shareholders. ”
In a subsequent post, Graham added that he was told by CEOs of publicly traded companies that “all startups should reincorporate in Nevada.”
“This is clearly the best option, and for startups that are still private, it's a no-brainer,” he wrote.
“I encourage all future companies to incorporate outside of Delaware,” wrote Sean Maguire, a former Google executive and current partner at Sequoia Capital.
