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.
Following the trial, Musk’s lawyers tried to persuade the Delaware business court judge to change her mind about the CEO’s compensation scheme. At the EV manufacturer’s annual shareholder meeting in Austin, Texas, in June, a vote was held among shareholders to approve Musk’s 2018 compensation plan.
Even while a stockholder vote might have a ratifying effect in this case, Chancellor Kathaleen McCormick stated in her ruling on Monday that it could not. The attorneys who successfully sued on behalf of Tesla shareholders to nullify the pay plan were granted a $345 million attorney fee judgment by the judge.
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.”
Musk has the right to challenge the ruling before the Delaware Supreme Court.
Musk took aim at the court after McCormick’s January ruling to nullify the plan, writing on X, “Never incorporate your company in the state of Delaware.” Following a resolution by shareholders to re-incorporate in Texas, the business formally changed its incorporation in June.
Judge McCormick wrote, “Were the court to condone the practice of allowing defeated parties to create new facts for the purpose of revising judgments, lawsuits would become interminable.” Musk had moved that Tesla’s ratification vote for his pay package should cause her to change her previous opinion.
Musk’s net worth has increased significantly in recent weeks despite the 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.
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