A Delaware judge ruled Tuesday in favor of Tesla shareholders who had sued to block the pay package that helped make the carmaker’s Chief Executive Elon Musk a multiple-time billionaire and the world’s richest man. Was done.
Chancellor of the Delaware Court of Chancery Kathleen St. J. “The process for approving Musk’s compensation plan was deeply flawed,” McCormick said in the decision. He ordered that the contract providing his record salary be voided.
A group of Tesla shareholders challenged a stock option package that would have resulted in Mr Musk getting the right to acquire Tesla shares, which were worth more than $70 billion when the stock price was higher. To receive the award, which was the largest of its kind and widely emulated by other corporations, Tesla had to meet certain revenue, profit and share price targets.
The lawsuit takes on even more significance following Mr Musk’s acquisition of Twitter in 2022. He faced widespread criticism for wasting time trying to overhaul Twitter, while Tesla’s shares declined and its growth slowed amid increasing competition. One justification for Mr Musk’s pay package at Tesla was that it was a way to keep him focused on building cars.
The case also raised questions about Tesla’s corporate governance and whether the board, which includes several close friends of Mr. Musk and his brother, Kimbal, does anything to rein in Mr. Musk’s behavior. The lawsuit argued that Mr. Musk played a large role in shaping her pay package.
The judge agreed. “In the final analysis,” he wrote, “Musk initiated a self-driving process, reprogramming speed and direction in the manner he deemed appropriate. This process came at an unfair cost.”
Mr Musk also testified during the trial and suggested that his influence on the car industry justified his salary. “Tesla has had a huge impact on the world,” he said. “It’s not just that Tesla is making electric vehicles – we’re actually the main reason the rest of the car industry has moved toward sustainable, electric vehicles.”
The case was heard in Delaware because Tesla, like many companies, is incorporated there.
This is a developing story. Check back for updates.