Delaware judge rejects request to restore Musk's $56 billion Tesla pay

Wilmington, Delaware — 

A Delaware justice ruled Monday that Tesla CEO Elon Musk inactive is not entitled to person a $56 cardinal compensation bundle contempt shareholders of the electrical conveyance institution voting to reinstate it.

The ruling by the judge, Chancellor Kathaleen McCormick of the Court of Chancery, follows her January determination that called the wage bundle excessive and rescinded it, astonishing investors, and formed uncertainty implicit Musk's aboriginal astatine the world's astir invaluable carmaker.

Musk did not instantly respond to an emailed petition for comment.

Tesla has said successful tribunal filings that the justice should admit a consequent June ballot by its shareholders successful favour of the wage bundle for Musk, the company's driving unit who is liable for galore of its advances — and reinstate his compensation.

McCormick said Tesla’s committee was not entitled to deed “reset” to reconstruct Musk’s wage package.

“Were the tribunal to condone the signifier of allowing defeated parties to make caller facts for the intent of revising judgments, lawsuits would go interminable,” she said successful her 101-page opinion.

She besides said Tesla made aggregate worldly misstatements successful its proxy connection regarding the ballot and could not assertion the ballot was a “cure-all” to warrant restoring Musk’s pay.

“Taken together,” the problems with Tesla’s arguments “pack a almighty punch,” she wrote.

Tesla shares fell 1.4% successful afterhours trade, pursuing the ruling.

McCormick besides ordered Tesla to wage the attorneys who brought the lawsuit $345 million, good abbreviated of the $6 cardinal they initially requested. She said the interest could beryllium paid successful currency oregon Tesla stock.

“We are pleased with Chancellor McCormick’s ruling, which declined Tesla’s invitation to inject continued uncertainty into Court proceedings," said a connection from Bernstein Litowitz Berger & Grossmann, 1 of the 3 instrumentality firms for the plaintiff.

The instrumentality steadfast besides said it looked guardant to defending the court's sentiment if Musk and Tesla appealed.

Musk and Tesla tin entreaty to the Delaware Supreme Court arsenic soon arsenic McCormick enters a last order, which could travel arsenic soon arsenic this week. The entreaty could instrumentality a twelvemonth to play out.

After the January ruling, Tesla shareholders flooded the tribunal with thousands of letters arguing that rescinding Musk's wage accrued the anticipation helium would permission Tesla oregon make immoderate products similar artificial quality astatine ventures different than Tesla.

Attorneys for shareholder Richard Tornetta, who sued successful 2018 to situation Musk's compensation package, had argued that Delaware instrumentality does not licence a institution to usage a ratification ballot to fundamentally overturn the ruling from a trial.

McCormick successful January recovered that Musk improperly controlled the 2018 committee process to negociate the wage package. The committee had said that Musk deserved the bundle due to the fact that helium deed each the ambitious targets connected marketplace value, gross and profitability.

But the justice criticized Tesla's committee arsenic "beholden" to Musk, saying the compensation program was projected by a committee whose members had conflicts of involvement owed to adjacent idiosyncratic and fiscal ties to him.

After the January ruling, Musk criticized the justice connected his societal media level X and encouraged different companies to travel the pb of Tesla and reincorporate successful Texas from Delaware, though it is unclear if immoderate companies did so.

The justice successful her January ruling called the wage bundle the "biggest compensation program ever — an unfathomable sum." It was 33 times larger than the adjacent biggest enforcement compensation package, which was Musk's 2012 wage plan.

As of Monday, the wage bundle was worthy $101.4 billion, according to Equilar, a compensation consulting firm.

Musk's 2018 wage bundle gave him banal grants worthy astir 1% of Tesla's equity each clip the institution achieved 1 of 12 tranches of escalating operational and fiscal goals.

Musk did not person immoderate guaranteed salary. Tornetta argued that shareholders were not told however easy the goals would beryllium achieved erstwhile they voted connected the package.