A Delaware judge has invalidated a $55.8bn pay agreement granted to Elon Musk by Tesla in 2018. Shareholder concerns about Musk’s elevated pay led to the lawsuit filed, which ultimately saw the pay deal annulled.
Judge Kathaleen McCormick’s ruling found that the Tesla board was overly influenced by Mr Musk’s celebrity status and did not fully inform shareholders, which resulted in the granting of the “unfathomable” pay package being ruled as unjustifiable. Elon Musk took to social media to respond, advising companies to incorporate in Nevada or Texas instead of Delaware if they wanted to leave such decisions in the hands of shareholders.
Tesla stock went down by 2.5% in after-hours trading on the day of the ruling, despite having already lost over 20% so far this year. The original arrangement, introduced in 2018, resulted in widespread criticism and calls for its rejection. Critics argue that Musk’s overpowering influence over the board, compounded with his significant stake in the company, makes such deals difficult to justify.
Since the original deal was made, Musk has sold part of his stake in Tesla in order to purchase a share of X, and now has an approximately 13% ownership in the electric car company.
