Billionaire Elon Musk has emerged as a cultural icon in recent years, largely due to his famous Tesla automobiles and especially after his acquisition of X, the social media platform previously known as Twitter, which has become a key player in sports media. However, he received some very unfortunate news this week.
On Monday, a Delaware judge once again denied Elon Musk a $56 billion compensation package from Tesla, according to Yahoo Finance.
This compensation package was initially denied in January by Chancellor Kathaleen McCormick of the Court of Chancery, who cited what she described as “extensive ties” between Musk and those negotiating the pay package. She also noted a lack of transparency regarding Musk’s relationships with the individuals who approved the deal.
In response, Tesla stockholders voted a second time in June to approve the pay package, overwhelmingly supporting it after the company conducted an aggressive public-relations campaign. Tesla hoped this additional vote would persuade McCormick to reverse her decision, but that was not the case.
McCormick said that Musk and the defendants had presented the “exact same” pay plan she previously determined violated due to conflicts of interest involving board members who participated in the initial vote.
“[A] stockholder vote standing alone cannot ratify a conflicted-controller transaction,” McCormick stated in her decision.
Moreover, McCormick ruled the second vote invalid because of multiple inaccuracies in Tesla’s communications to shareholders. For instance, McCormick highlighted that Tesla had misled stockholders by claiming her initial decision misinterpreted Delaware law and suggesting their vote would “fix” the issue.
Needless to say, this is awful news for Musk, and it led to a lot of reactions in the comments of the story.
“Considering all the recalls and QC issues that the clustertruck has, I wouldn’t think that a pay package of that size would be in order,” one person wrote in the comments.
“For the past 16 years Musk’s businesses have received about $20 billion dollars of tax payers money. He most certainly does not deserve that type of salary for being CEO of Tesla. In fact Tesla should be paying the federal government back the money like Chrysler did. Why is Tesla exempt?” another person added.
“There’s no way that a Board of Directors acting in the best interests of the shareholders would have given Musk a $56 billion package. After all, isn’t he supposed to make his money through his own stock?” someone else said.
“That only amounts to about $7 for every person ON THE PLANET! No one person should be able to out-earn – in a single year – the entire GDP of multiple nations combined. Get real. Those funds would be better served on shareholder dividends, or employee pay and R&D. It would cost less to give 100,000 of their ‘top’ employees each a half million dollar bonus – and it would be better for the economy, because those people would actually do things with that money, spending it and spreading it around. If I see the guy at the top getting more money than one person can count (at $10 per second, counting non-stop, it would take 177 years, and more than six months to reach $56 billion) while the company ‘can’t afford’ an extra couple of grand for me, I’d be gone,” someone else wrote.
“Here’s an idea. What if Musk passed on the $50 billion to the workers in salary and benefits? How many billions do he and the shareholders need?” another person added.
“In 2023 Tesla hit a record revenue of $96 billion, the guy expects $56 billion compensation which more than wipes out the total book value of the company of $48 billion….and then he has the bowls of talking efficiency and deleting bureaucracy. Clean your own house first Tesla boy,” someone else wrote.
It seems likely that this legal battle will persist, potentially reaching the Supreme Court.
