New York (AFP) – A Delaware appeals court cleared the way Friday for Elon Musk to receive a long-contested $56 billion Tesla pay package, reversing an earlier judgment in the protracted case. The decision by the Delaware Supreme Court rejects a pair of judgments by Chancellor Kathaleen McCormick of the state’s Court of Chancery and sets the stage for the world’s richest person to get another windfall.
In a pair of 2024 rulings, McCormick invalidated the 2018 package, which once loomed as historically large but have since been eclipsed by the tech tycoon’s most recent Tesla package. The five-judge appeals panel determined that McCormick ruled improperly in ordering a rescission, the tossing out of Musk’s package in its entirety. “It is undisputed that Musk fully performed under the 2018 grant, and Tesla and its stockholders were rewarded for his work,” the ruling said as it reversed the rescission.
Though approved by a majority of Tesla shareholders, the 2018 package ended up in court when Tesla shareholder Richard Tornetta challenged the award as excessive. In a statement posted online Friday, attorneys representing Tesla shareholders said they were considering next steps. The court struck down the award in January 2024 following a five-day trial, calling the process “deeply flawed.” The board proved vulnerable to manipulation by Musk, “the paradigmatic ‘Superstar CEO,'” wrote McCormick, who upheld her determination in December 2024 following an appeal.
But Tesla’s board has staunchly supported Musk throughout the legal saga, approving an “interim” compensation award in August worth about $29 billion for him and then unveiling a pay package worth as much as $1 trillion. Tesla shareholders on November 6 easily approved the latest package, which is tied to a number of performance and valuation targets.
© 2024 AFP
