Elon Musk won't get his $55bn pay package after all
Business
A judge struck down Tesla CEO’s massive compensation package after shareholders sued to block it
(Web Desk) - Elon Musk isn’t going to get that $55 billion pay package after all, a Delaware Court of Chancery judge has ruled.
The ruling means Tesla’s board will need to come up with a new proposal.
The ruling threatens Musk’s fortune if it makes it through an appeal, Bloomberg reports. Without the options in that package, Musk may only be the third-richest man in the world.
Tesla shareholders approved the package in 2018, which gave Musk incentive to hit specific milestones, including a market valuation of $650 billion, which was more than 10 times Tesla’s value at the time.
The trial hinged on a specific question: did Musk mislead the shareholders when he gave them the plan?
Greg Varallo, attorney for the investor who sued, Richard Tornetta, said the investors weren’t told that Musk himself came up with the plan or that the board’s members were beholden to Musk.
Last February, Judge Kathaleen McCormick called this argument a “kill shot.”
“Defendants were unable to prove that the stockholder vote was fully informed because the proxy statement inaccurately described key directors as independent and misleadingly omitted details about the process,” McCormick wrote in her decision.
“The defendants proved that Musk was uniquely motivated by ambitious goals and that Tesla desperately needed Musk to succeed in its next stage of development, but these facts do not justify the largest compensation plan in the history of public markets.”
