Recently, Tesla’s CEO Elon Musk made headlines after a judge decided that he shouldn’t get his $56 billion pay package. This ruling came even after Tesla shareholders voted to support Musk’s pay in June.
The legal battle started when a shareholder questioned Musk’s 2018 compensation package, designed to reward him only if Tesla did really well. Musk’s pay included 12 sets of stock options that could eventually give him a big chunk of the company. He wouldn’t get a regular salary—if Tesla succeeded, he would earn through stock options.
In January, a judge named Kathaleen McCormick rejected Musk’s huge pay package, saying it wasn’t fair to shareholders and that the Tesla board didn’t really have control over Musk’s payments. Many believed Musk didn’t need that extra pay since he was already making a lot from Tesla’s success.
Musk reacted by suggesting people shouldn’t incorporate their companies in Delaware if they want shareholders to have more control. Instead, he recommended states like Nevada or Texas.
After the June vote, where shareholders approved Musk’s pay once again, the judge still stood by her earlier decision, saying that a vote can’t change a ruling made by the court. She insisted that the compensation negotiations were swayed by Musk himself, even though he didn’t own most of Tesla.
Now, there are possibilities for Tesla’s board: they could appeal the judge’s ruling, create a new pay package, or consider settling the lawsuit for a smaller payment to Musk.
Leave a Reply