Updated on December 3, 2024 – 10:01 amReading time: 3 minutes
In June, Tesla shareholders again agreed to a share package worth billions for Musk. A judge sees it differently. Your reasoning makes you sit up and take notice.
Things have been going pretty well for the richest man in the world in recent months. Elon Musk became one of Donald Trump’s most important advisors. After massively supporting the presidential campaign of the re-elected US president, he was rewarded by Trump with a position as a government advisor. From now on, Musk will head a newly created authority to reduce bureaucracy.
Critics view this with concern. They fear that the Tesla owner could soon regulate himself in this role and thus create significant advantages for his numerous companies.
However, Musk cannot yet influence the courts in the USA. And right here, in a court in the state of Delaware, the entrepreneur suffered a bitter setback. Despite the support of shareholders of the electric car manufacturer Tesla, the responsible judge opposed an agreed remuneration for the CEO of $54 billion in bonuses.
Kathaleen McCormick had already decided at the beginning of the year that Musk was not entitled to the money. She justified her decision by saying that the company boss had too much influence in the background when agreeing the share allocation plan in 2018. In January, the chairwoman of the Court of Chancery in Delaware spoke of an “unbelievable sum” and decided that the planned compensation was excessive.
The compensation plan was originally intended to have a total value of $2.6 billion, but due to the sharp rise in Tesla’s share price, this had increased to $56 billion by the time of the initial decision. Based on Monday’s closing price, the value would be more than $100 billion.
The judge concluded earlier this year that Musk had close relationships with the members of the Tesla board of directors with whom he negotiated the generous compensation. However, the shareholders were left in the dark about the involvement before the first vote. This meant that they would not have had the opportunity to make a well-considered decision, the judge explained her verdict at the time. She therefore supported the plaintiff, who wanted to cancel the agreement with Musk.
Tesla shareholder Richard Tornetta sued against the remuneration. He argued in court that the goals set for Musk were easy to achieve. Musk was not even required to dedicate his full time to the car manufacturer. Even back then, he was only a part-time boss, as he also ran the space rocket company SpaceX. Musk later also bought the online platform Twitter, which he then renamed X.
In June, Tesla shareholders actually approved the huge share package again, but that didn’t automatically mean that Musk would get justice in court. Tesla can still take action against the current decision. However, even without the compensation package, Musk would remain the richest person in the world.
Tesla shares fell by a good two percent to around $349 in after-hours US trading on Monday. Earlier this year, when the judge made her first decision, the papers cost less than $200.
Tesla shares had recently benefited from Musk’s connections to US President-elect Trump. After Trump’s numerous joint appearances with Musk, including at campaign events and most recently at a Thanksgiving dinner, Musk was given the nickname “First Buddy,” i.e. the president’s best buddy.
