A court in the state of Delaware in the USA ruled that the record remuneration of Tesla CEO Elon Musk in the amount of $56 billion will not be paid.
This is reported by the BBC.
The decision came after months of legal wrangling. Despite the fact that the billionaireʼs compensation was approved by Tesla shareholders in June this year, Judge Catherine McCormick upheld her previous decision from January 2024. At the time, she argued that Musk had too much influence on board members.
In response, the entrepreneur wrote on the social network that shareholders, not judges, should control the votes in the company. Tesla plans to appeal McCormickʼs decision.
"If not overturned, this ruling will mean that judges and plaintiffsʼ attorneys are running Delaware companies, not their rightful owners, the shareholders," the company said.
According to the judge, the $56 billion payout would be the largest listed payment for a company executive in history. Tesla allegedly failed to prove that this tranche was fair.
It is expected that the corporation may try to restore Elon Muskʼs reward in the state of Texas. The company moved its legal base there in early 2024.
What preceded
In 2018, Teslaʼs board of directors decided to compensate Musk for ten years. The reward consisted of 12 tranches of options on Tesla shares, which were to go to Musk on the condition that the capitalization of the automaker increases by $50 billion, and the company itself achieves certain revenue goals.
But in the same year, one of the shareholders of Tesla, Richard Tornetta, demanded to cancel the bonus, considering it excessive. He filed a lawsuit. In January 2024, a Delaware court canceled the compensation payment, and Musk then requested to transfer the companyʼs registration to Texas.
In June 2024, Tesla shareholders approved a record payment of $56 billion to Elon Musk and the transfer of the companyʼs registration from Delaware to Texas. Even then, legal experts said that the shareholdersʼ vote was not mandatory.
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