Justice once again rejects Elon Musk’s $56 billion mega-compensation at Tesla

Justice once again rejects Elon Musk’s $56 billion mega-compensation at Tesla
Justice once again rejects Elon Musk’s $56 billion mega-compensation at Tesla

A judge in the state of Delaware (north-eastern United States) once again rejected, on Monday, a huge $55.8 billion compensation plan awarded by Tesla to its boss Elon Musk, although this amount had been approved by a majority of the automobile manufacturer’s shareholders.

The car manufacturer condemned this court decision in the evening and announced on X that it would appeal it. “Shareholders must control the votes of companies, not judges,” responded multi-billionaire Elon Musk.

Judge Kathaleen McCormick had already rejected this envelope in January, denouncing its allocation by a committee whose members were all close to Elon Musk. She had thus acceded to the request of a shareholder of the company, who had taken legal action to have this remuneration invalidated.

Related: Judge overturns Elon Musk’s former compensation plan for Tesla, estimated at $56 billion

Despite this first cancellation, the board of directors chose to submit this plan a second time to the general meeting, the shareholders adopting it by 72%. It had already been validated for the first time during the 2018 AGM.

After this vote in June, Tesla proposed “a meeting between the parties to discuss a proposal for the continuation” of the case, specifying that the lawyers of the shareholder at the origin of the procedure had given their agreement.

Judge McCormick accuses shareholders of “relying on vague theories”

The initial judgment “did not say that Musk should not be paid for his work at Tesla,” the magistrate wrote in the decision rendered Monday. “Tesla and Musk could have proposed a new plan that they deemed fair and accepted that the court would only cancel part” of the amount initially awarded, continued Judge McCormick. “Instead, they tried to get the same plan approved by relying on vague theories about Delaware law.”

Asked by AFP, Elon Musk’s lawyers did not respond.

The lawyer for the individual shareholder had argued that the decision of the general meeting had “no legal consequence” on the procedure decided by Judge McCormick. The judge also decided on Monday to award $345 million in compensation to this lawyer, Gregory Varallo, at Tesla’s expense.

In electronic trading after the close on Wall Street, Tesla shares fell a little more than 1%.

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