Tesla CEO Elon Musk faced a legal setback on Monday, December 2 when a Delaware judge upheld her previous decision to nullify his massive 2018 compensation package, valued at approximately $56 billion. The plan, the largest ever for a public company executive, was ruled improperly granted.
Musk’s Attempt to Reverse the Decision
Musk’s legal team sought to persuade Chancellor Kathaleen McCormick of the Delaware Court of Chancery to reverse her earlier ruling after Tesla shareholders had voted to “ratify” the pay plan during the company’s annual shareholder meeting in Austin, Texas, in June.
However, McCormick reaffirmed her decision, stating, “Even if a stockholder vote could have a ratifying effect, it could not do so here.”
The judge also approved $345 million in attorney fees for the legal team that successfully sued on behalf of Tesla shareholders to void the compensation plan.
The plaintiffs’ legal team, Bernstein, Litowitz, Berger & Grossmann, welcomed the ruling, saying, “We are pleased with Chancellor McCormick’s ruling, which declined Tesla’s invitation to inject continued uncertainty into court proceedings.”
Musk’s Response and Tesla’s Shift to Texas
After the initial January ruling that voided the pay package, Musk criticized the Delaware court system on X (formerly Twitter), advising against incorporating companies in the state. Following this, Tesla conducted a shareholder vote to reincorporate in Texas, completing the shift in June.
Regarding Musk’s motion to reconsider the ruling based on the shareholder ratification vote, McCormick stated, “Allowing defeated parties to create new facts for the purpose of revising judgments would make lawsuits interminable.”
Musk’s Wealth and Tesla’s Stock Performance
Despite the legal defeat, Musk’s net worth has surged significantly in recent weeks. Excluding the disputed pay package options, his wealth has increased by over $43 billion, driven by a 42% rise in Tesla’s stock price over the past month.
Musk’s Tesla holdings alone are now valued at nearly $150 billion, based on Monday’s closing price, solidifying his position as one of the world’s richest individuals, even without considering his stake in SpaceX.
