Elon Musk55.8 billion dollars Tesla The compensation package has just been thrown out once again. A US judge on Monday rejected the billionaire’s petition to reinstate his out-of-pocket pay, rejecting his attempt to overturn a previous decision by a Tesla shareholder vote.
Monday’s discovery Initially followed by a Delaware court threw out Musk’s multibillion-dollar Tesla compensation package in January. In that decision, Chancellor Kathleen McCormick found that Tesla’s board of directors breached its duty to shareholders by recklessly following Musk’s proposal about his salary as CEO, offering no pushback and no negotiation. tried The court further determined that the $55.8 billion package was disproportionate to the profits Tesla received, given that the deal made no demands on the amount of time Musk would actually spend working at the company.
Tesla shareholders vote to give Elon Musk a $56 billion pay package after the court blocked it
Musk was predictably unhappy with the decision. in June, A compensation package of $55.8 billion was again submitted to shareholders for approval During Tesla’s annual meeting. Monday’s ruling noted that Tesla told shareholders the company could save $25 billion in accounting fees by ratifying the deal.
Once shareholders voted to re-approve Musk’s pay package, he and Tesla took the result back to court to ask that the earlier decision be overturned. In their petition, they argued that a company’s shareholders should be able to overturn a court decision even if there has been a breach of duty, stating that “stockholders have the power to adopt any corporate act that They consider it in their own interest.”
Unfortunately for Musk, McCormick will have none of it. In his decision this weekThe judges were particularly unimpressed with Tesla’s production of literally new evidence in an attempt to overturn the court’s decision, noting that they did not cite a single case where such shenanigans were permitted. has gone
“If the Court were to condone the practice of allowing losing parties to create new facts for the purpose of modifying judgments, lawsuits would become endless,” McCormick wrote.
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The court drew a distinction between newly discovered evidence, which would have already existed at the time of the previous trial, and newly created evidence such as Tesla’s June stockholder vote. While newly discovered evidence may be grounds for reopening a case, newly created evidence is not.
McCormick further noted that Tesla made numerous false or misleading statements to its shareholders before the June approval vote, such as claiming that any violations found by the court could be resolved by reauthorizing Musk’s compensation. is
“[E]Even if the stockholder vote could have a verifiable effect on the grant, it cannot here because of multiple, material misstatements in the proxy statement regarding the effect of the vote,” McCormick wrote.
Basically, shareholders can’t just get together and decide that what their board did was actually legal when a US court has already determined that it wasn’t.
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Musk immediately took to social media to deny the decision “Shareholders should control company votes, not judges.” Tesla has also announced its intention to appeal.
“A Delaware judge just overruled an overwhelming majority of shareholders who own Tesla and who voted twice to pay @elonmusk what he’s worth,” wrote the official Tesla X account. “The court’s decision is wrong, and we’re going to appeal. This decision, if not overturned, means that judges and plaintiffs’ lawyers are running Delaware companies instead of their rightful owners — the shareholders.”
Addressing such claims in Monday’s ruling, the court found that a company’s board members are more akin to trustees than agents. While agents act on behalf of another party (Tesla’s shareholders in this case), trustees have a legal obligation to act in the best interests of said party.
