Elon Musk.Photo:Nathan Laine/Bloomberg via Getty
Nathan Laine/Bloomberg via Getty
A judge in Delaware voidedElon Musk’s Tesla pay package, valued at $55.8 billion, on Tuesday after ruling that the board of directors did not prove “that the compensation plan was fair.”
According to McCormick, Tornetta proved Musk “controlled Tesla” and the process that ended with Musk’s pay package being approved was “deeply flawed.”
Elon Musk in 2021.Theo Wargo/Getty
The judge noted Musk’s “extensive ties with the persons tasked with negotiating on Tesla’s behalf,” adding that Musk “launched a self-driving process, recalibrating the speed and direction along the way as he saw fit.”
McCormick wrote that Musk had an “enormous influence” over Tesla, thanks to his relationship with the company and its directors.
“In addition to his 21.9% equity stake, Musk was the paradigmatic ‘Superstar CEO,’ who held some of the most influential corporate positions (CEO, Chair, and founder), enjoyed thick ties with the directors tasked with negotiating on behalf of Tesla, and dominated the process that led to board approval of his compensation plan,” McCormick wrote. “At least as to this transaction, Musk controlled Tesla.”
Crafting Musk’s pay package “arrived at an unfair price,” McCormick wrote, later adding that the “plaintiff is entitled to rescission.”
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Musk’s team was “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.
“The parties are to confer on a form of final order implementing this decision and submit a joint letter identifying all issues, including fees, that need to be addressed to bring this matter to a conclusion at the trial level,” the judge’s decision read.
“Never incorporate your company in the state of Delaware,” Musk wrote onX(formerly Twitter), shortly after the ruling was published.
Musk owns about 13% of Tesla’s stock outright, reportsCNBC. In December, hetweetedthat he was “uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control. Enough to be influential, but not so much that I can’t be overturned.”
source: people.com
