Elon Musk's record $56,000,000,000 Tesla pay package rejected for a second time
It looks like Elon Musk is being hit hard in the pocket, with his record-breaking $56 billion Tesla pay packet once again being rejected.
Musk might be on track to become the world's first trillionaire, but not if Judge Kathaleen McCormick has anything to do with it.
The Tesla CEO has had the record-breaking $56 billion compensation package removed, and despite shareholders voting for him to have it reinstated, McCormick is worried that he has too much power over board members. As the case went back to courts in Delaware, McCormick upheld her decision from January.
She says that Tesla continuously fails to prove that the pay packet is fair, with it originally being awarded all the way back in 2018.
Advert
75% of Tesla shareholders might've approved the payment passing in June, but McCormick says that the Tesla lawyers' 'creative' arguments won't sway her.
In her ruling, McCormick wrote: "Even if a stockholder vote could have a ratifying effect, it could not do so here."
She also ruled that the Tesla shareholder who launched the case against Musk should receive $345 million in fees but nowhere near the $5.6 billion of Tesla shares they originally asked for.
As reported by the BBC, there were worries that a ruling in favor of Musk would damage conflict of interest laws in the state. Among these critics is Charles Elson of the University of Delaware's Weinberg Center for Corporate Governance. Elson called McCormick's judgment 'well-reasoned': "You had a board that wasn't independent, a process that was dominated by the chief executive, and a package that was way out of any sort of reasonable bounds. It's quite a combo."
As Tesla moved its legal base to Texas in the aftermath of the original ruling, Elson thinks Musk's team will try and go for a similar pay packet there.
Despite the majority of shareholders rallying behind Musk, Norway’s sovereign wealth fund and the California state teachers’ retirement system were among those who voted against the pay packet.
Tesla's board argued that the jaw-dropping compensation was needed to keep Musk involved with the car manufacturer, which is something (unsurprisingly) echoed by the world's richest man.
Musk has been vocal about McCormick in the past, and following her latest decision, he took to X to lambast her decision. He told users: "Shareholders should control company votes, not judges." He's previously warned other businesses to avoid Delaware, which is a popular state to file incorporation paperwork because of its friendly tax policies
Tesla has also said it will continue to fight the case, referring to it as 'wrong,' although it doesn't sound like McCormick has any intention of changing her mind.