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Judge from Delaware again rejected Tesla CEO Elon Musk’s $56 billion compensation packagedespite the fact that the plan was twice approved by more than 72% of Tesla shareholders.
Judge Kathleen McCormick upheld her earlier decision to overturn the payout, prompting Tesla to announce plans to appeal to the Delaware Supreme Court.
Tesla is strong criticized resolution, arguing that it undermines the authority of shareholders. “A Delaware judge has just overturned the supermajority of Tesla’s stockholders who voted twice to pay Elon Musk what he’s worth,” Tesla said in a statement.
The company called the decision “wrong” and warned of wider ramifications. “This ruling, if not overturned, means that judges and plaintiffs’ attorneys are running Delaware companies, not their rightful owners, the shareholders.”
The compensation package tied to the ambitious performance goals has been a point of contention, with critics questioning its size even if Musk meets the goals. Tesla’s decision to appeal highlights the ongoing battle over corporate governance and the balance of power between shareholders and judicial oversight of executive compensation decisions.
musk commented“shareholders should control company votes, not judges.”
The outcome of the appeal could set a significant precedent for shareholder rights in determining executive pay. It also sets a precedent for startups seeking to open their companies in the state of Delaware, as a judge can overturn the shareholders’ decision.
