Elon Musk’s record-breaking pay package as Tesla’s CEO, valued at around $101 billion, has been rejected once again by a Delaware court, despite being re-approved by Tesla shareholders in June. According to the Leaders Asia sources, the package, consisting of 303 million Tesla stock options, was initially thrown out in January by Delaware Chancery Court Chancellor Kathaleen McCormick. She ruled that Musk and the Tesla board had failed to prove the package was fair to shareholders.
In an attempt to reverse the ruling, Musk’s legal team argued that the package had been ratified by 84% of shares not held by Musk or his brother, Kimbal Musk. However, McCormick rejected this argument on Monday, emphasizing that shareholder approval did not automatically make the compensation plan in the best interests of Tesla investors. In her opinion, she criticized the defense’s attempt to justify the deal, stating that their arguments contradicted established legal principles.
Musk, who does not receive a salary or bonuses from Tesla, has made his fortune through stock options that allow him to buy shares at a fraction of their market price. As per the Leaders Asia sources, McCormick agreed with the argument that the board was too closely aligned with Musk, noting that he “negotiated against himself” regarding his own compensation. Although she acknowledged that Musk was entitled to compensation, she concluded that the amount agreed upon was not fair to shareholders.
Despite this, Tesla’s board had argued that the pay package was necessary to keep Musk fully engaged in leading the company, especially as he also manages SpaceX, Neuralink, the Boring Company, and X. Meanwhile, Musk’s attention has been drawn to Washington, where he has made significant donations to Donald Trump’s 2024 campaign and taken on a leadership role in Trump’s new Department of Government Efficiency.
