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Elon Musk cannot keep Tesla pay package worth 55 billion dollars, judge rules

Home> News> Tech News

Published 09:32 31 Jan 2024 GMT

Elon Musk cannot keep Tesla pay package worth 55 billion dollars, judge rules

A judge has ruled against Elon Musk - and it's worth a whole lot of money.

Prudence Wade

Prudence Wade

Bad news for Elon Musk, as a judge has said he has to give up a pay packet worth more than $55 billion (£43.4 billion).

Tesla's board of directors gave this huge chunk of change to Musk, but now a Delaware court has said he isn't able to claim it.

It's been a long time coming - the ruling has been made five years after a shareholder lawsuit targeted Musk and the Tesla board of directors.

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Omar Marques / Stringer / Getty

Lawyers against Musk argued that the billionaire dictated the pay package, saying it was the product of sham negotiations with directors who were not independent of him.

In response, defence lawyers said it was fairly negotiated by a committee of independent directors - and it was even OK'd by a shareholder vote when it didn't need to be.

Even as the richest man in the world - the Forbes real-time billionaires list has Musk's net worth at a total of $210.6 billion - $55 billion is an awful lot of money.

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As you can probably imagine, there was only one place Musk was going to go to react to the news: X, the social media platform he owns.

Elon Musk/X

And he didn't mince his words, appearing to respond to the lawsuit with business advice. “Never incorporate your company in the state of Delaware,” he said bluntly.

Back in 2022, Musk said in trial testimony that he had nothing to do with dictating the terms of the compensation package.

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However, the judge determined that because Musk was a controlling shareholder with a potential conflict of interest, the pay package msut be subject to a more rigorous standard.

Chancellor Kathaleen St Jude McCormick said in her decision that the process leading to the approval of Musk's pay packet was "deeply flawed".

She added: "Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf.”

And in a brutal final ruling, McCormick said that the only suitable way forward was to rescind Musk's compensation package.

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Elon Musk/X

She wrote: “In the final analysis, Musk launched a self-driving process, recalibrating the speed and direction along the way as he saw fit. The process arrived at an unfair price. And through this litigation, the plaintiff requests a recall.”

Musk's final word on the matter came in a scathing follow-up post on X.

He said: "I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters."

Featured Image Credit: NurPhoto / Contributor / Zhang Peng / Contributor / Getty
Elon Musk
Twitter
Tesla

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