Tesla will appeal the judge's second rejection of Musk's compensation plan

Tesla plans to challenge a Delaware judge’s decision to void CEO Elon Musk’s $56 billion compensation package, even though the pay plan was approved by shareholders twice. In a statement on X, Tesla called the court’s ruling “wrong,” saying it would appeal the decision.

“A Delaware judge just overturned the supermajority of Tesla’s stockholders who voted twice to pay Elon Musk what he’s worth. The court’s decision is wrong, and we will appeal it. “This ruling, if not overturned, means that judges and plaintiffs’ attorneys are running Delaware companies, not their rightful owners, the shareholders,” Tesla said. wrote in the post on X.

A Delaware judge just overturned a supermajority of Tesla-owning shareholders who twice voted for the payout @elonmusk what he is worth.

The court’s decision is wrong, and we will appeal it.

This ruling, if not overturned, means that judges and plaintiffs’ attorneys rule Delaware…

— Tesla (@Tesla) December 2, 2024

A Delaware court of chancery ruled in its original ruling that the compensation package was flawed because of Musk’s alleged influence over Tesla’s board of directors, which included several of the CEO’s close associates. Despite a subsequent shareholder vote in June to ratify the package, which ended with TSLA shareholders overwhelmingly approving the CEO’s pay package for a second time, Chancellor Kathleen McCormick overruled that vote in a recent ruling.

“Even if a shareholder vote could have a ratifying effect, it could not here. . . . If the court were to condone the practice of allowing losing parties to create new facts for the purposes of reconsideration, litigation would become endless,” McCormick’s opinion said. . , as noted in a CNBC the report

Legality https://t.co/SIyb7TwQzw

– Elon Musk (@elonmusk) December 3, 2024

McCormick also approved $345 million in attorneys’ fees for attorneys for plaintiff Richard Tornett, who owned nine shares of TSLA when he filed a lawsuit against Musk’s 2018 compensation plan. Tornetta’s lawyers initially demanded 29,402,900 TSLA shares for their compensation, which was was worth about $5.1 billion at the time. Later, the lawyers noted that they would submit to a cash award of $1.44 billion instead.

Elon Musk shared his feelings on Xstating, “Shareholders should control company votes, not judges.” Musk also described the entire scenario surrounding his salary as “the law.” Ultimately, Tesla’s appeals process could potentially take the case to the Delaware Supreme Court, potentially prolonging the electric car maker’s legal battle for months or potentially even years. And Musk’s compensation, at least for now, remains in legal limbo.

Judge Kathleen McCormick’s new opinion on Elon Musk’s compensation plan can be viewed below.

Tesla – decision after trial 2 by Simon Alvarez on Scribd