Why Elon Musk Isn’t Getting a Record-High Pay As Tesla CEO

At Tesla’s annual assembly in June, firm shareholders approved CEO Elon Musk’s $56 billion pay package deal, however it appears to be like like Musk may not get his compensation in spite of everything.

Delaware Choose Kathaleen McCormick first voided Musk’s pay package deal in January, writing in a 200-page ruling that Musk’s attorneys “have been unable to show that the stockholder vote was totally knowledgeable as a result of the proxy assertion inaccurately described key administrators as unbiased and misleadingly omitted particulars concerning the course of.”

On Monday, she upheld that January choice in a 103-page document, outlining that though Tesla shareholders accepted the plan in June by a wide margin, the transfer was not sufficient to ratify Musk’s pay.

One Tesla shareholder, Pennsylvania resident Richard Tornetta, sued Musk in 2018 over the pay deal, kickstarting the years-long authorized battle that culminated in Monday’s ruling.

Associated: The Lawyers Who Fought Against Elon Musk’s Pay Package Are Asking $370,000 an Hour in Legal Fees: ‘We Did Battle With the Very Best’

Musk’s attorneys cannot change the result of a post-trial choice primarily based on proof that got here to gentle after the trial, McCormick wrote. In different phrases, the stockholder vote would not have the facility to verify Musk’s pay.

Tesla posted on X on Monday that “the courtroom’s choice is mistaken, and we’ll attraction.” The corporate mentioned that the ruling creates a brand new commonplace for judges and attorneys to run Delaware corporations as a substitute of shareholders.

Musk reposted Tesla’s publish and added, “Shareholders ought to management firm votes, not judges.”

Shareholders ought to management firm votes, not judges https://t.co/zRsWGjC2hG

— Elon Musk (@elonmusk) December 3, 2024

McCormick additionally gave the attorneys who fought towards Tesla an award of $345 million in money or Tesla shares. The group initially requested billions of dollars in charges.

Musk’s compensation package deal was first approved by the vast majority of Tesla shareholders in 2018. It gave Musk the choice to purchase tons of of thousands and thousands of Tesla shares at a preset value if Musk led Tesla to attain sure monetary objectives.

It could have been “the biggest government compensation award within the historical past of public markets,” based on McCormick’s Monday opinion.

Associated: Days After Layoffs, Tesla Pushes Stockholders to Approve Elon Musk’s $56 Billion Pay Package