On Monday, a Delaware court affirmed her earlier decision that the compensation plan was illegally awarded, defeating Elon Musk’s attempt to have his 2018 CEO pay package reinstated.
At over $56 billion, the package was the biggest executive compensation plan for a publicly traded firm in American history. In a second post on his social media platform, Musk referred to the decision as “complete corruption,” and Tesla stated in a post on X that it intends to challenge it.
By declaring that Musk had personally controlled Tesla and imposed the parameters of his salary to a board that failed to fairly bargain, Chancellor Kathaleen McCormick invalidated the pay plan in January. She referred to the procedure that resulted in that compensation plan’s approval as seriously faulty.
In response to the viewpoint, Tesla asked investors to approve Musk’s 2018 CEO compensation plan in a vote held during its annual meeting in Austin, Texas, in June 2024. Using the outcome of that vote, Musk’s lawyers tried to persuade the judge to change her mind following the trial.
In her judgment published Monday, McCormick stated that a vote by stockholders could have a ratifying impact, but not in this case. She went on to say that lawsuits would become endless if the court approved of the practice of enabling defeated parties to fabricate new facts in order to amend verdicts.
McCormick authorized a $345 million attorney fee award for the attorneys who successfully sued Tesla shareholders to nullify Musk’s remuneration plan as part of Monday’s opinion.
In a statement, lawyers from the plaintiff’s firm, Bernstein, Litowitz, Berger & Grossmann, said, “We are pleased with Chancellor McCormick’s ruling, which declined Tesla’s invitation to inject continued uncertainty into Court proceedings and thank the Chancellor and her staff for their extraordinary hard work in overseeing this complex case.”
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Musk reacted angrily to the Delaware court’s January ruling by writing on X, “Never incorporate your company in the state of Delaware.” Following a shareholder vote, Tesla formally changed its state of incorporation to Texas and reincorporated there.
Additionally, Musk changed SpaceX, his defense contractor business, from Delaware to Texas as its state of incorporation.
In recent weeks, Musk’s net worth has increased significantly despite the legal setback. Musk is more than $43 billion richer now than he was when Donald Trump won the election last month, excluding all of the options included in the compensation deal. In the four weeks since the election, Tesla’s stock has surged 42 percent on hopes that Musk’s friendship with the future president will result in measures that benefit his businesses.
As of Monday’s closing price, Musk’s remaining Tesla stock is valued at about $150 billion. He would rank among the wealthiest individuals in the world based just on that, excluding his share in SpaceX. According to Equilar, Musk’s 2018 package would have been worth $101.4 billion at the current stock price.
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