Wilmington, Delaware – The Delaware court recently invalidated a compensation deal tied to the carmaker’s market value in January, referring to it as an ‘unfathomable sum.’ Musk reports.
Tesla has once again pushed its shareholders to approve CEO Elon Musk’s contentious $56 billion payment, which was initially set in 2018 but rejected by a Delaware judge at the beginning of the year.
The unique compensation structure excludes any salary or cash bonuses but instead offers rewards linked to Tesla’s market value potentially reaching $650 billion over the next decade. Currently, Tesla is valued at over $500 billion as per LSEG data.
Kathaleen McCormick from the Delaware court of chancery dismissed Musk’s pay, deeming the board’s decision to award such a staggering sum as unjust to shareholders.
Tesla’s board chairperson, Robyn Denholm, disputes the court’s ruling, expressing disagreement with the judgment and suggesting that it doesn’t align with corporate law principles.
Following the January ruling, which is subject to appeal, the largest pay package in corporate America was invalidated by the court.
Musk’s 2023 compensation was disclosed as $0, underscoring his unconventional arrangement of not taking a salary from Tesla but receiving compensation through stock options.
On a separate note, Tesla has proposed relocating its state of incorporation from Delaware to Texas and has urged its investors to approve this decision, indicating a new direction for the company.
Before the market opens, shares of the leading automaker were up by 1%, reflecting the ongoing developments within the company and the uncertainties surrounding Musk’s compensation.