A Delaware judge issued an opinion Monday upholding an earlier ruling that voided a $56 billion compensation package, proposed in 2018, for Tesla CEO Elon Musk.
Musk’s legal team challenged the January ruling by Chancellor Kathaleen McCormick of Delaware’s Court of Chancery citing, in part, the outcome of a June vote by Tesla shareholders that approved the pay plan.
McCormick said the Tesla board of directors attempt to hit “reset” to restore Musk’s compensation package didn’t pass legal muster.
“Were the court to condone the practice of allowing defeated parties to create new facts for the purpose of revising judgments, lawsuits would become interminable,” McCormick wrote in her 101-page opinion, per a report from Reuters.
“We are pleased with Chancellor McCormick’s ruling, which declined Tesla’s invitation to inject continued uncertainty into court proceedings and thank the chancellor and her staff for their extraordinary hard work in overseeing this complex case,” attorneys from Bernstein, Litowitz, Berger & Grossmann, the law firm representing the plaintiff, said in a statement.
In a statement posted on X, Tesla decried McCormick’s latest ruling and promised an appeal.
“The court’s decision is wrong, and we’re going to appeal,” the post read. “This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners — the shareholders.”
Musk also took to social media to respond to Monday’s decision, calling the ruling “absolute corruption” and writing that “shareholders should control company votes, not judges.” Musk has since moved the states of incorporation for both Tesla and his space vehicle development company SpaceX from Delaware to Texas.
In her January ruling in favor of the shareholder who filed the challenge to the Tesla board’s proposed pay plan for Musk, McCormick called the value of the package “an unfathomable sum” and questioned the process that led to the $56 billion proposal, the largest compensation package in U.S. history for a public company executive, per a report from CNBC.
“Swept up by the rhetoric of ‘all upside,’ or perhaps starry eyed by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?” McCormick wrote in her January decision.
Musk’s close association with President-elect Donald Trump is being viewed favorably by investors who believe the relationship bodes well for future policy direction that may favor Musk’s endeavors. Tesla’s stock value has jumped over 40% since the election.
While Musk at one time described himself as “half-Democrat, half-Republican,” he has since come down fully in the GOP camp and he’s now set to join Trump’s second-term inner circle as co-leader of the proposed Department of Government Efficiency.
At Tesla’s current stock value, Musk’s 2018 compensation package would be worth over $100 billion.
