Delaware Court Vindicates Elon Musk, Restores $56 Billion Tesla Pay Package
The Delaware Supreme Court ruled Friday that Elon Musk’s record-setting 2018 CEO pay package from Tesla, once valued at approximately $56 billion when fully vested, must be reinstated, overturning a lower court’s decision that had previously voided the package.
The case, In re Tesla, Inc. Derivative Litigation, stemmed from a lawsuit pushed by trial lawyers and embraced by Delaware’s Court of Chancery, which ordered the rescission of Musk’s performance-based compensation despite the fact that Musk fully achieved every required milestone.
The compensation package, which was the largest ever awarded to a corporate executive, played a crucial role in Musk’s rise to becoming one of the richest individuals in the world.
Chancellor Kathaleen St. Jude McCormick criticized the process by which Musk’s compensation plan was approved, highlighting Musk’s significant influence over the compensation committee and board members, many of whom have strong personal ties to him.
“The concept of fairness calls for a holistic analysis that takes into consideration two basic issues: process and price,” the judge wrote.
“The process leading to the approval of Musk’s compensation plan was deeply flawed. Musk had extensive ties with the persons tasked with negotiating on Tesla’s behalf.”
Musk himself openly rejected Delaware after the initial ruling, relocating Tesla’s corporate charter to Texas.