Billionaire Elon Musk has become a cultural figure in recent years, largely thanks to his renowned Tesla vehicles as well as his acquisition of X, the social media platform once known as Twitter, which has grown into a significant player in sports media.
However, this week, Musk got some pretty horrible news.
On Monday, a Delaware judge once again rejected Elon Musk’s $56 billion compensation package from Tesla, according to Yahoo Finance.
This pay package was initially denied in January by Chancellor Kathaleen McCormick of the Court of Chancery, who pointed to what she called “extensive ties” between Musk and those negotiating the deal. She also cited a lack of transparency about Musk’s relationships with the individuals who approved the package.
In response, Tesla shareholders voted for a second time in June to approve the package, backing it overwhelmingly after the company ran an aggressive public relations campaign.
Tesla had hoped this additional vote would convince McCormick to reconsider her decision, but she upheld her stance.
McCormick said that Musk and Tesla had presented the “exact same” pay plan, which she had previously ruled to be problematic due to conflicts of interest involving board members who had participated in the initial vote.
“[A] stockholder vote standing alone cannot ratify a conflicted-controller transaction,” McCormick stated in her ruling.
Furthermore, McCormick deemed the second vote invalid due to several inaccuracies in Tesla’s communications to shareholders. She noted that Tesla had misled stockholders by suggesting her initial decision misinterpreted Delaware law and implying that their vote would “fix” the issue.
Unsurprisingly, this news is a significant setback for Musk, and it has sparked numerous reactions in the comments section of the article.
“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 commenter wrote.
“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,” another commenter 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 suggested.
“For the past 16 years Musk’s businesses have received about $20 billion dollars of taxpayers’ 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.
“In 2023, Tesla hit a record revenue of $96 billion, the guy expects $56 billion in compensation, which more than wipes out the total book value of the company of $48 billion….and then he has the gall to talk about efficiency and deleting bureaucracy. Clean your own house first, Tesla boy,” someone else remarked.
“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 commented.
It seems this legal battle is far from over and may eventually reach the Supreme Court.
