Tesla CEO Elon Musk’s $56 billion pay package will not be reinstated, a Delaware court has ruled. The decision follows months of legal disputes, despite earlier approval by Tesla shareholders and directors.
Court Decision and Musk’s Response
Judge Kathaleen McCormick upheld her earlier ruling, stating that Tesla’s board members who approved the pay deal were too influenced by Musk. Reacting to the ruling, Musk wrote on X: “Shareholders should control company votes, not judges.”
Tesla criticized the ruling as “wrong” and vowed to appeal. The company argued that if the decision stands, judges and lawyers will run Delaware companies instead of shareholders. Judge McCormick countered that the 2018 pay package, the largest ever for a public company CEO, was not proven fair by Tesla.
Broader Implications and Legal Battle
The court also awarded $345 million in fees to the Tesla shareholder who brought the case but denied their request for $5.6 billion in Tesla shares. Experts believe a ruling favoring Musk would have weakened Delaware’s conflict-of-interest laws, which protect all investors.
Charles Elson, from the University of Delaware’s Weinberg Center for Corporate Governance, praised the judge’s reasoning. “The board wasn’t independent, the process was dominated by Musk, and the pay was unreasonable,” he said.
Tesla may attempt to create a similar pay package in Texas, where it moved its legal base earlier this year.