Court Upholds Tesla's Decision: Musk's Mega Pay Package on Ice

A Delaware judge reaffirmed that Elon Musk is not eligible for his $56 billion compensation package, even after Tesla shareholders voted to reinstate it. The court found the package excessive and ruled against it, citing improper negotiations. Tesla plans to appeal the decision to the Delaware Supreme Court.

In a significant legal development, a Delaware judge has once again ruled against Elon Musk receiving a monumental $56 billion compensation package from Tesla, despite shareholders voting in favor of reinstating it last June. Chancellor Kathaleen McCormick of the Court of Chancery reiterated her January decision, deeming the package excessive and questioning the legitimacy of its approval process.

Tesla swiftly responded to the ruling, declaring its intention to appeal, emphasizing that the judgment overrides a supermajority shareholder decision. An appeal could reach the Delaware Supreme Court shortly after McCormick's final order. Tesla argued for recognizing the shareholder vote as valid, highlighting Musk's pivotal role in the company's successes, yet McCormick emphasized that procedural fairness cannot be bypassed.

The decision also highlighted concerns about corporate governance, as McCormick pointed out that Musk improperly controlled the 2018 board process. Legal representatives for the plaintiffs welcomed the decision, while Tesla's future steps remain closely watched as the case progresses through the appeals process.

(With inputs from agencies.)