Elon Musk’s record-breaking $56 billion Tesla pay package was termed “an unfathomable sum” that was not fair to shareholders, by a Delaware judge on Tuesday in the US.
This US court ruling puts brake on the largest pay package in corporate America availed by Elon Musk.
“Swept up by the rhetoric of ‘all upside,’ or perhaps starry eyed by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?” wrote Kathaleen McCormick of Delaware’s Court of Chancery.
McCormick’s opinion directed the Tesla shareholder who challenged the pay plan to work with Elon Musk’s legal team on an order implementing the decision.
“Never incorporate your company in the state of Delaware,” Musk said in a post on X.
The ruling can be appealed to the Delaware Supreme Court.
“The incredible size of the biggest compensation plan ever — an unfathomable sum — seems to have been calibrated to help Musk achieve what he believed would make ‘a good future for humanity’,” wrote McCormick in her 201-page opinion.
Musk testified during the compensation trial in November 2022, “It’s a way to get humanity to Mars.”
Tesla’s agreement with Musk contributes a significant part of his fortune, which is one of the world’s largest.
The plaintiff’s legal team also argued the board had a duty to offer a smaller pay package or look for another CEO and that they should have required Musk to work full-time at Tesla instead of allowing him to focus on side projects, like SpaceX and X.