Tesla: Elon Musk’s ‘awesome’ compensation plan struck down in court

camouflage Elon Musk. A judge in the state of Delaware in the eastern United States ruled in favor of a shareholder of the automaker. You are here In 2018, he asked to cancel the compensation plan given to CEO Elon Musk, which was appreciated. 56 billion dollars. “The verdict is in favor of the plaintiff”concluded Judge Kathaleen McCormick in a 200-page decision published on Tuesday, January 30. “Complainant is entitled to rescission”, he decided. It specifies that the parties must now “discuss among themselves to establish a final decision intended to carry out this judgment” And “to put an end to this case at the trial level”. “Man the richest in the world Did he pay too much?begins the court’s decision, emphasizing that the plan represented 250 times the average compensation of Elon Musk’s peers.

What he calls “Superstar CEO” (superstar boss) owned 21.9% of Tesla’s capital at the time, but was actually the one in control, according to the document. The judge believes that the shareholders received it the information “wrong” And “misleading” about the board of directors and the remuneration committee, several members who have been close to the billionaire for 15 to 20 years, approved the plan before the general meeting.

The millionaire posted on the social network X (formerly Twitter), its owner: “Never locate your company headquarters in the state of Delaware”. At around 00:30 GMT on Wednesday, Tesla shares lost 2.89% in electronic trading after the close on the New York Stock Exchange. The law firm representing lead plaintiff Richard Tornetta and other shareholders expressed satisfaction in a statement sent to AFP. the affair “iconic” in terms of remuneration. the judge “Tesla’s board of directors failed in its fiduciary duty in structuring (Elon) Musk’s compensation in installments and therefore ordered the entire package to be rescinded.”stated the firm Bernstein, Litowitz, Berger & Grossman.

“Tesla has very low probability of survival”

“We are very grateful for the careful and well-reasoned decision of the judge Overturn Tesla’s ridiculously high pay plan», commented Greg Varallo, one of the lead attorneys for the plaintiffs, quoted in the company’s statement. This will be done “For the benefit of Tesla investors, because they will eliminate the dilution created by this huge plan”, he continued. Asked by AFP, Elon Musk’s lawyer did not immediately react.

The hearings were held in November 2022, and Elon Musk defended this outrageous compensation plan. The probability of survival (of the group) was very low», then the multi-entrepreneur recalled, ensuring that the manufacturer was very close to bankruptcy in 2018. Elon Musk, along with Tesla and some board members, was sued in 2018 by a shareholder who accused them of improper authorization. “the largest compensation plan ever given to a manager”.

This plan includes granting shares to Mr. Musk Tesla based on the achievement of various goals over ten years. It was $56 billion when it was approved. According to the complainant, the employer dictated his conditions to the directors, taking into account their relationships with him or personal interests, which were not independent enough to oppose them. And meanwhile he He didn’t work full-time for Tesla because he was also the head of the space company SpaceX and startups Neuralink and The Boring Company.

He also bought the Twitter social network, which he named X. The five-day trial was held without a jury. Elon Musk assured that he was not involved in the development of the plan, although documents shown in court showed that he discussed it with members of the board of directors and executives.

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