A judge in the US state of Delaware ruled today that Tesla CEO Elon Musk is still not entitled to receive a $56 billion pay package despite the electric car company’s shareholders voting to restore employment.
Judge Kathleen McCormick’s ruling follows her decision last January that called the pay package excessive and struck it down, surprising investors and casting doubt on Musk’s future at the world’s most valuable automaker.
Later vote
Tesla said in court documents that the judge must acknowledge the subsequent vote taken by the company’s shareholders last June in favor of Musk’s pay package, the driving force of the company and the creditor for many of its achievements, and recognize his right to this package.
As for McCormick, she said that Tesla’s board of directors does not have the right to “re-adjust” the situation to restore Musk’s pay package.
“If the Court allows defeated parties to create new facts for the purpose of reviewing rulings, the litigation will become endless,” she added in her 101-page opinion.
She said Tesla made several fundamental errors on the vote, and could not claim the vote was a “blanket solution” to justify clawing back Musk’s pay.
Tesla shares fell 1.4% in after-hours trading, following the ruling.
Elon Musk is the richest man in the world, with a fortune of $336.8 billion, according to data from the Forbes list of the world’s richest people.
An unimaginable amount
McCormick ordered Tesla to pay $345 million to the lawyers who filed the case, much less than the $6 billion they initially requested, and said the fees could be paid in cash or through Tesla shares.
Musk and Tesla can appeal to the Delaware Supreme Court once McCormick issues a final order, which could be issued as soon as this week, and the appeal could take a year to implement.
Last January, McCormick found Musk controlled the board’s 2018 decision for such a generous pay package, while the board then said Musk deserved the package because he met all the ambitious goals for market value, revenue and profitability.
In her ruling last January, the judge described the pay package as “the largest pay plan ever – an unimaginable amount”.
It was 33 times higher than the next largest CEO pay package, which was for Musk himself in 2012.
