Delaware Court Blocks Elon Musk’s Staggering $56 Billion Compensation Package: A Blow to Tesla’s Future


A judge in Delaware has overturned Tesla Motors’ 2018 compensation package for CEO Elon Musk, which was initially valued at $56 billion. The court case was initiated by a shareholder who claimed that the payment was an overpayment. Judge Kathaleen McCormick described the adoption of the compensation package by the Tesla board as “deeply flawed.” In response, Musk took to his social media platform, X, previously known as Twitter, and expressed his opinion on incorporating a company in Delaware, stating, “Never incorporate your company in the state of Delaware.”

The compensation package granted to Musk was the largest in business history, contributing to his rise as one of the wealthiest individuals in the world. Tesla’s directors argued during the week-long trial that the arrangement was necessary to ensure the continued focus of one of the most dynamic entrepreneurs in the world. However, the court argued that the Tesla board was swayed by the “superstar appeal” surrounding Musk when negotiating the pay package.

The case may be appealed to the Supreme Court of Delaware, which has the authority to hear such appeals. The news of the blocked compensation package resulted in a nearly 3% drop in Tesla stock during extended trading in New York. Overall, the company’s value has declined by approximately 20% since the beginning of the year.

In response to the ruling, Musk suggested forming a company in either Nevada or Texas, where shareholders would have more influence in decision-making. He shared on his platform X a poll where his followers could vote on whether Tesla should “change its state of incorporation to Texas, home of its physical headquarters.”

It is worth noting that Musk is not solely focused on Tesla. He also owns social networking platform X, brain chip startup Neuralink, and SpaceX, in addition to being the CEO and a significant stakeholder of Tesla. After selling a significant portion of his Tesla stock to acquire X, Musk now owns around 13% of the social network company. However, he has expressed a desire for a larger stake in the electric vehicle manufacturer.

One of Musk’s concerns regarding Tesla is the company’s investments in artificial intelligence (AI) technologies. He has stated his discomfort with growing Tesla’s presence in AI and robotics without having 25% voting control. Musk worries that the current ownership structure leaves the company vulnerable to a “takeover by dubious interests.” In light of this, he has expressed a preference for building products outside of Tesla unless the ownership structure changes.

In conclusion, a judge in Delaware has blocked Elon Musk’s $56 billion compensation package from Tesla. The court deemed the adoption of the package “deeply flawed,” and Musk subsequently expressed his dissatisfaction on his social media platform X. The future of the case may now be decided by the Supreme Court of Delaware. Meanwhile, Tesla’s stock value has experienced a decline, and Musk has suggested exploring alternative states for company incorporation. Additionally, Musk has expressed concerns about Tesla’s ownership structure and its focus on AI technologies.

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