In 2018, Tesla Elon Musk a A $56 billion pay package this helped him rise to the top of the world’s richest lists. Now a judge in Delaware has invalidated the contract between the company and the CEO, calling the compensation an “unreasonable amount” that was unfair to shareholders. As it first appeared and reported In Chancery Daily Topics, the Delaware Court of Chancery announced its decision on Richard Tornetta’s lawsuit. A Tesla shareholder has accused the automaker of breaching its fiduciary duty by approving a package that unjustly enriched its chief executive.
Judge Kathaleen McCormick wrote in her ruling that Musk “enjoyed a thick relationship” with the executives responsible for negotiating the pay package on Tesla’s behalf, which meant “no meaningful negotiation of any terms of the plan took place.” The judge also talked about how Musk owns 21.9 percent of the automaker when discussing the package. That gave him “every incentive to take Tesla to a level of transformative growth,” as he would earn $10 billion for every $50 billion in market capitalization.
Swept up by the rhetoric of “everything upside down,” or perhaps starry-eyed by Musk’s superstar appeal, the board of directors never asked the $55.8 billion question: Did Tesla need such a plan to retain Musk and achieve its goals? the judge wrote court document. whom The Washington Post notes that it ruled that Tornetta had the right to “terminate” and ordered Tesla and its shareholders to comply with its decision and cancel the contract. Musk’s camp could still appeal his decision.
Musk sold some of his Tesla stock to pay for his acquisition of Twitter, now X, since his pay package was approved. He currently owns about 13 percent of Tesla, though recently he said said he wanted to have 25 percent control of the company before comfortably growing it to become a leader in artificial intelligence and robotics.
Musk in response to the court order he tweeted: “Never incorporate your company in Delaware.” That too published a survey asked his audience if Tesla had changed its state of incorporation to Texas, where its physical headquarters are located.