Tesla blasted the ruling that overturned the most generous pay package in human history, and vowed to appeal on behalf of CEO Elon Musk in a case that could have broader implications for corporate America.
On Monday, a Delaware chancery judge Kathleen McCormick Musk, his co-CEOs and the company itself told defenders that the group failed to inform Tesla owners that their CEO had authorized them. dictate the terms of his compensation.
He final resolution on the matter It voids a previous shareholder approval in 2018, which granted the company convertible options for 304 million shares at a 93% discount to the current price.
The automaker said it would now take its case to the Delaware Supreme Court, arguing that its ruling did not prevent Musk from receiving what was rightfully his.
Much worse McCormick was, in fact, defrauding shareholders giving the package first.
At Monday’s closing price of $357.09 a share, it is worth a net $101 billion after taking into account the cash required to exercise the options.
“A Delaware judge has just thrown out a large majority of the shareholders who own Tesla and voted twice to pay Elon Musk what he’s worth,” the company said. he said on monday “The decision of the court is wrong, and we will appeal.”
Compensation challenges
Musk’s unprecedented net worth, which exceeds $335 billion, complicates the design of a new pay package.
The original 2018 deal required Tesla to spend $2.3 billion, which for most CEOs, but relatively insignificant for Musk today.
Judge McCormick criticized Tesla’s board, including chairman Robyn Denholm, for failing to act independently in 2018.
Denholm, who has sold more than $75 million in Tesla stock this year, testified that his role at Tesla provided him with “life-changing wealth.”
The fallout from Silicon Valley
The ruling has sparked controversy over Delaware’s status as the first state to adopt corporate statutes.
Critics, including venture capitalist Bill Gurley, have warned that the decision could push companies to business-friendly states like Nevada.
Gurley called the Musk package “one of the most shareholder-aligned incentive deals ever” and argued that Tesla’s meteoric rise since 2018 proves it wasn’t excessive.
“This is a victimless crime and that’s what makes Delaware look like a kangaroo court,” he added.
Next steps for Tesla
Tesla’s appeal to the Delaware Supreme Court has long stakes. Judge McCormick dismissed the June confirmation vote as insufficient to remedy earlier fiduciary failures.
Some analysts believe the case could go all the way to the US Supreme Court, where the conservative majority may be more sympathetic to Tesla’s arguments.
Tesla shares closed Monday at $357.09, with Musk’s controversial choice still hanging in the balance.
