Delaware Judge Rejects Request to Reinstate Elon Musk's $56 Billion Compensation Package

A Delaware judge has ruled against reinstating Elon Musk's $56 billion compensation package, despite a shareholder vote in June supporting it. The ruling follows an earlier decision that found the package excessive and negotiated under improper influence by Musk.

A Delaware judge ruled on Monday that Elon Musk is not entitled to the $56 billion pay package he was awarded by Tesla, despite a vote by shareholders to reinstate it. Chancellor Kathaleen McCormick of the Delaware Court of Chancery upheld her earlier decision from January, which found the compensation package excessive and rescinded it. This ruling has continued to raise concerns about Musk’s future with Tesla, the electric vehicle giant he leads.

Musk had not immediately responded to requests for comment on the decision. Tesla, however, argued in its court filings that the June vote by shareholders in favor of the pay package should be taken into account, seeking the reinstatement of Musk’s compensation. The judge also ruled that Tesla must pay $345 million in attorney’s fees to the lawyers representing shareholder Richard Tornetta, although this amount is far less than the $6 billion the attorneys had initially sought.

In 2018, Tornetta filed a lawsuit to challenge Musk’s pay package, arguing that Delaware law does not allow a company to overturn a court ruling through a shareholder vote. McCormick had found earlier this year that the pay package was negotiated under improper influence, as Musk had too much control over the board's decisions. Despite the board’s argument that Musk deserved the package for his role in Tesla’s success, McCormick criticized the board for being overly influenced by Musk’s personal and financial ties.

Following her January decision, Musk voiced his disapproval of the ruling on his social media platform X, and he suggested that other companies should consider reincorporating in Texas instead of Delaware. Despite these criticisms, the ruling remains in place, and the $56 billion package, which Musk would have received based on Tesla's achievement of ambitious goals, remains rescinded.

Tesla's Shareholder Vote Fails to Overturn Judge's Ruling on Musk's Pay

Despite a shareholder vote in June supporting Elon Musk’s $56 billion compensation package, a Delaware judge has ruled that the package is not valid. Chancellor Kathaleen McCormick upheld her previous decision from January, which deemed the pay plan excessive.