Billionaire Elon Musk has emerged as a cultural icon in recent years due to his iconic Tesla automobiles and especially after he purchased X, the social media platform formerly known as Twitter, which has become an integral part of sports media. But he got some pretty horrible news this week.
On Monday, a Delaware judge denied Elon Musk a $56 billion compensation package from Tesla for the second time, according to Yahoo Finance.
The compensation package was initially denied in January by Chancellor Kathaleen McCormick of the Court of Chancery because of what she called “extensive ties” between Musk and the people negotiating the pay package. Additionally, she pointed out a lack of public disclosure about Musk’s relationships with those who approved the deal.
In response to this decision, Tesla stockholders then approved the pay package a second time in June, voting overwhelmingly in favor of the compensation package after an aggressive public-relations campaign from the company.
Tesla thought this additional vote should be enough to convince McCormick to change her decision, but they were wrong.
McCormick pointed out that Musk and the defendants put forth the “exact same” pay plan that she found had breached the duty of loyalty that board members owe to their shareholders, by law, with the same conflict of interest with board members who voted for the initial shareholder vote.
“[A] stockholder vote standing alone cannot ratify a conflicted-controller transaction,” McCormick said in her decision.
Additionally, McCormick determined that the second vote was invalid due to multiple incorrect statements in Tesla’s messaging.
For example, McCormick pointed out that Tesla inaccurately told stockholders that her first decision got Delaware law wrong and that their vote would “fix” it.
Needless to say, this is horrible news for Musk, as his massive compensation has once again been blocked by the judge.
It’s likely that this legal battle will continue, perhaps going all the way to the Supreme Court.
About Kevin Harrish