A judge has blocked Tesla’s’ unfathomable’ $56 billion payment. His salary was unjustly fixed at six times the total compensation of the 200 highest-paid CEOs in 2021.
A judge finds that Elon Musk’s $56 billion compensation from Tesla is excessive.
The compensation package, which helped make Mr. Musk one of the richest people in the world, was the largest in company history.
Five years ago, Tesla shareholder Richard Tornetta launched the case, claiming the board lacked independence and that the company’s CEO was unfairly controlling talks over the remuneration package. In the court’s ruling, Tornetta was instructed to collaborate with Musk’s attorneys to draft an order to carry out the judge’s ruling.
The Tesla board approved the salary package, but Judge Kathaleen McCormick found this decision “deeply flawed.”
The judge further stated that Tesla’s directors, who had been “swept up by the rhetoric” surrounding Mr. Musk’s “superstar appeal,” had structured the remuneration package.
It’s difficult to defend a deal like this since the judge determined that Mr. Musk controlled the board.” Professor Brian Quinn of Boston College Law School
Judge McCormick described the payout as “an unfathomable sum” unfair to the stockholders.
Tesla’s stock fell about 3% during prolonged New York trading. This year, it has already lost over 20% of its worth.
During a week-long trial, Tesla directors contended that the firm was paying to guarantee that one of the most creative entrepreneurs in the world kept his focus on the electric vehicle manufacturer. The package was dubbed “a great deal for shareholders” by Antonio Gracias, a Tesla director from 2007 to 2021, who said it was the reason behind the company’s remarkable success.
Additionally, Mr. Musk posted on X saying, “If you prefer shareholders to decide matters, I recommend incorporating in Nevada or Texas.” Is it appropriate for Tesla to “change its state of incorporation to Texas, home of its physical headquarters?” he asked his followers in a poll.
Musk said on Twitter/X, “Never incorporate your company in Delaware.”
Elon Musk attempted to refute allegations that his $56 billion compensation package was predicated on simple performance benchmarks and authorized by an obedient board of directors. He told a court that he was focused on Tesla in 2017 during the electric vehicle manufacturer’s “crisis.”