At Tesla’s annual meeting in June, company shareholders approved CEO Elon Musk’s $56 billion pay package, but it looks like Musk might not get his compensation after all.
Delaware Judge Kathaleen McCormick first voided Musk’s pay package in January, writing in a 200-page ruling that Musk’s attorneys “were 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.”
On Monday, she upheld that January decision in a 103-page document, outlining that even though Tesla shareholders approved the plan in June by a wide margin, the move was not enough to ratify Musk’s pay.
One Tesla shareholder, Pennsylvania resident Richard Tornetta, sued Musk in 2018 over the pay deal, kickstarting the years-long legal battle that culminated in Monday’s ruling.
Related: The Lawyers Who Fought Against Elon Musk’s Pay Package Are Asking $370,000 an Hour in Legal Fees: ‘We Did Battle With the Very Best’
Musk’s lawyers can’t change the outcome of a post-trial decision based on evidence that came to light after the trial, McCormick wrote. In other words, the stockholder vote doesn’t have the power to confirm Musk’s pay.
Tesla posted on X on Monday that “the court’s decision is wrong, and we’re going to appeal.” The company said that the ruling creates a new standard for judges and lawyers to run Delaware companies instead of shareholders.
Musk reposted Tesla’s post and added, “Shareholders should control company votes, not judges.”
Shareholders should control company votes, not judges https://t.co/zRsWGjC2hG— Elon Musk (@elonmusk) December 3, 2024
McCormick also gave the lawyers who fought against Tesla an award of $345 million in cash or Tesla shares. The group originally requested billions of dollars in fees.
Musk’s compensation package was first approved by the majority of Tesla shareholders in 2018. It gave Musk the option to buy hundreds of millions of Tesla shares at a preset price if Musk led Tesla to achieve certain financial goals.
It would have been “the largest executive compensation award in the history of public markets,” according to McCormick’s Monday opinion.
Related: Days After Layoffs, Tesla Pushes Stockholders to Approve Elon Musk’s $56 Billion Pay Package
