fbpx

Forum

Find answers, ask questions, and connect with our
community around the world.

  • Delaware Court Strikes Down Elon Musk’s $56 Billion Tesla Compensation as Unfair

    Posted by Christian on January 31, 2024 at 12:19 am

    The Delaware Court of Chancery recently ruled against Elon Musk’s $56 billion compensation package, which was tied to his role as Tesla’s CEO. The ruling, issued by Judge Kathaleen McCormick, declared the package unfair and voided what has been described as the largest compensation deal in corporate history. This decision came after a Tesla shareholder, Richard Tornetta, challenged the compensation plan, arguing it was unjustly enriched Musk without requiring him to focus entirely on the carmaker. The plan, approved by shareholders in 2018, consisted of 20.3 million stock option awards distributed across 12 tranches, contingent on Tesla achieving certain market cap, revenue, and adjusted earnings milestones.

    Central to the case was whether the compensation plan was fair, especially considering Musk’s dual role as both CEO and a major shareholder. The court found the process leading to the approval of Musk’s compensation deeply flawed, noting the proxy statement for the shareholder vote inaccurately described key directors as independent and omitted critical details about the negotiation process. The judge also highlighted that the compensation plan did not necessitate Musk devoting a specific amount of time to Tesla, critiquing the board’s failure to address this issue.

    In response to the ruling, Musk expressed his displeasure on social media, suggesting that companies should reconsider incorporating in Delaware. He also raised the question of whether Tesla should change its state of incorporation to Texas.

    The decision raises significant questions about Musk’s future compensation and the broader implications for corporate governance, especially regarding executive compensation plans and the role of shareholder approval in such agreements

    Christian replied 8 months, 1 week ago 1 Member · 0 Replies
  • 0 Replies

Sorry, there were no replies found.

Log in to reply.