Elon Musk’s record $56bn Tesla pay deal rejected for second time
Tesla chief executive Elon Musk’s record $56bn (£47bn) pay will not be restored, a judge has ruled.
The Delaware court decision came after months of legal wrangling, although it was approved by shareholders and directors this summer.
Judge Katherine McCormick upheld her decision in January, arguing that board members were too influenced by Musk.
In response to the ruling, Musk wrote on X: “Shareholders should control company votes, not judges.”
Tesla vowed to appeal the ruling, calling the decision “wrong.”
The company said in a post on
Judge McCormick said it would be the largest ever pay package for a listed company boss.
She said Tesla had failed to demonstrate that its pay packages since 2018 were fair.
In June, a shareholder vote on the payment passed with 75% of the vote, but the judge disagreed with paying such a large amount, although she said Tesla’s lawyers made “creative” arguments.
“Even if a shareholder vote could have the effect of approval, it cannot do so here,” she wrote in her opinion.
The judge also ruled that Tesla shareholders and Musk who sued Tesla should receive $345 million in fees but not the $5.6 billion in Tesla stock they sought.
Some observers said a ruling in favor of Musk and Tesla would be a blow to Delaware’s conflict-of-interest laws.
“The purpose of conflict rules is to protect all investors” not just a few, said Charles Elson of the Weinberg Center for Corporate Governance at the University of Delaware.
Mr. Elson said Judge McCormick’s opinion made sense.
“The board is not independent, the process is CEO-led and the package goes well beyond anything reasonable,” he said. “It’s really a combination.”
Mr. Elson said he expected Tesla might try to reinvent a similar pay package in Texas Where the company moves its legal base following the pay ruling earlier this year.
