Multibillion package has been called ‘biggest compensation plan ever’
Chancellor Kathaleen McCormick of Delaware’s Court of Chancery filed her 101-page decision on Monday. In an X post, Tesla responded to the decision and expressed intent to appeal.“A Delaware judge just overruled a supermajority of shareholders who own Tesla and who voted twice to pay @elonmusk what he’s worth,” the post read. “The court’s decision is wrong, and we’re going to appeal.”
“This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners – the shareholders.”
Tesla CEO Elon Musk speaks at the company’s Gigafactory in Shanghai, China, on Jan. 7, 2020. (Qilai Shen/Bloomberg/Getty Images)
McCormick’s ruling comes months after she previously struck down the same compensation deal in January, finding that Musk’s close relationships with certain board members influenced negotiations and that there was no adequate proof that the size of the package was fair.
The compensation package, also called Musk’s 2018 CEO Performance Award, would consist of 303 million shares of Tesla stock. The compensation was contingent on Tesla meeting certain milestones under Musk’s leadership.
The closing price of a single Tesla stock was roughly $357 on Monday, meaning that the package could now be worth $108 billion, a whopping 12 figures.
In her decision, McCormick wrote that stockholders were not entitled to “hit reset” to restore the original pay package and that doing so would lead to endless litigation.
“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,” she said.
SpaceX and Tesla founder Elon Musk speaks during an America PAC town hall on Oct. 26, 2024, in Lancaster, Pa. (Samuel Corum/Getty Images)
“The large and talented group of defense firms got creative with the ratification argument, but their unprecedented theories go against multiple strains of settled law.”
In January, McCormick said the pay package was the “biggest compensation plan ever – an unfathomable sum.” It was 33 times bigger than the next largest executive compensation package, which was Musk’s 2012 compensation plan.
Musk previously acknowledged the legal battle on X in January.
Elon Musk (Richard Bord/WireImage/Getty Images)
FOX Business’ Eric Revell and Reuters contributed to this report.
