Delaware Judge Confirms Ruling Invalidating Huge Tesla Pay Package for Elon Musk

In a recent development, a Delaware judge has reconfirmed the decision that Tesla must revoke Elon Musk’s lucrative pay package. Chancellor Kathaleen St. Jude McCormick upheld her previous ruling, denying the request by Musk and Tesla’s directors to overturn the decision. The judge also dismissed a significant fee request by the plaintiff’s attorneys, awarding them $345 million instead.

The lawsuit was initiated by a Tesla stockholder challenging Musk’s controversial 2018 compensation package. McCormick found that Musk had manipulated the negotiations for the pay package with non-independent directors, leading to her decision to rescind the package. Despite this ruling, Tesla shareholders later voted to ratify Musk’s pay package for the second time in June.

Defense attorneys argued that the shareholder vote affirmed Musk’s entitlement to the pay package, but McCormick deemed these arguments flawed. She emphasized that a shareholder vote alone could not ratify a conflicted transaction like the pay package. The judge also criticized the excessive $5.6 billion fee request by the plaintiff’s attorneys, ultimately awarding them $345 million for their efforts.

The fee award, while substantial, aligns with the court’s goal of preventing windfalls to legal counsel. McCormick emphasized that $5.6 billion would be considered excessive, making the $345 million fee more appropriate. This fee award is notably lower than the record $688 million legal fees awarded in the Enron case in 2008.

Overall, the legal battle over Elon Musk’s pay package at Tesla continues to unfold in the Delaware court system, with the recent ruling reaffirming the decision to rescind the controversial compensation plan.



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