In 2018, Tesla paid Musk a salary of US$56 billion, helping him rise to the top of the world’s richest list. Now, a Delaware judge has invalidated the deal between the company and the CEO, calling the compensation amount “unfathomably high” and unfair to shareholders. As originally seen and reported by Chancery Daily on Threads, the Delaware Court of Chancery has issued its ruling in a lawsuit filed by Richard Tornetta. Tesla shareholders have accused the automaker of breaching its fiduciary duty by approving a plan that unfairly enriched its chief executive.
Judge Katherine McCormick wrote in her decision that Musk’s “close relationship” with the director responsible for negotiating its compensation package on Tesla’s behalf meant “there was no meaningful negotiation on any terms of the plan.” . The judge also talked about how Musk owned 21.9% of the automaker at the time the plan was negotiated. This gives him “full motivation to drive Tesla to transformative levels of growth,” as he can gain $10 billion for every $50 billion in market capitalization.
“Swayed by the ‘all is well’ rhetoric, or perhaps beguiled by Musk’s superstar appeal, the board never asked the $55.8 billion question: whether it was necessary for Tesla to preserve the plan and achieve its goals ?” the judge wrote in court documents.as Washington post Pointing out, she ruled that Tornetta had the right to “rescind” and ordered Tesla and its shareholders to implement her decision and reverse the transaction. However, Musk’s camp can still appeal her ruling.
From the day his compensation package was approved, Musk sold some Tesla stock to help pay for his acquisition of Twitter (now X).He currently owns about 13% of Tesla, although he recently explain He wants to gain 25% control of the company before he feels comfortable growing the company into a leader in artificial intelligence and robotics.
In response to the court ruling, Musk Tweet: “Never register your company in Delaware.” He also posted a poll Followers were asked whether Tesla should change its domicile in Texas, where its physical headquarters is located.
from Tech Empire Solutions https://techempiresolutions.com/elon-musks-56-billion-tesla-compensation-plan-rejected-by-court/
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