Tesla CEO and founder billionaire Elon Musk met with a setback after a US court upheld its previous decision to not permit the $56 billion pay package for him. The decision came on Monday after a long legal battle fought by billionaire Musk. The court said in its order that Tesla’s board decision to award a pay package is not “independent” as the company’s board is very close to Musk, and the possibility of him influencing the members cannot be reasoned out. The judge also noted that the $56 billion pay package that Musk eyed for himself is not the largest sum for the boss of a listed company.
“Even if a stockholder vote could have a ratifying effect, it could not do so here...The practice of allowing defeated parties to create new facts for the purpose of revising judgements, lawsuits would become interminable,” said the court in its order.
Musk, who is dissatisfied with the court’s ruling and has said he will appeal against it. Additionally, he said such decisions should be made by the shareholders of the company and not judges in a post on X.
“Shareholders should control company votes, not judges,” said Musk in his post. “This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners- the shareholders,” said Tesla on X.
The case dates to 2018, when an award mentioned that Musk would get all options if Tesla’s stock price increased and its sales and earnings grew. Tesla, which was then struggling to sell its electric vehicles, it was impossible that the award would turn into a reality for the billionaire CEO. But Tesla sales increased, and its share prices surged and consequently, Musk earned all options that were earlier considered next to impossible due to the struggling health of his company.
However, the Tesla shareholder who contested the award and filed the lawsuit found that the company had provided “materially misleading” information to investors.
“The process leading to the approval of Musk’s compensation plan was deeply flawed,’ said the judge in her 2022 ruling.
