A Delaware court has rejected Elon Musk’s massive pay package for serving as Tesla’s CEO, despite it being approved by Tesla shareholders earlier this year.
The package, valued at about $101 billion based on Tesla’s current stock price, includes 303 million stock options.
Delaware Chancery Court, Chancellor Kathaleen McCormick first dismissed the pay package in January 2023, when it was worth around $56 billion.
A shareholder had challenged the package, arguing it was unfair and failed to benefit Tesla investors.
McCormick ruled that Tesla and its board did not prove the pay plan was reasonable, and her decision stood even after shareholders reaffirmed the package in June.
The court found that the Tesla board, which approved the compensation, was too closely tied to Musk to be impartial.
McCormick noted that Musk admitted he effectively “negotiated against himself” to set the terms of his pay.
“The board gave in to Musk’s demands without proving that the terms were fair to shareholders,” McCormick wrote in her ruling.
She acknowledged that Musk deserves compensation for his role but said the record-breaking package was excessive.
Musk, one of the world’s wealthiest people, does not take a salary or bonus from Tesla.
Instead, his pay comes through stock options, which allow him to buy Tesla shares at much lower prices than their market value.
Tesla’s board argued that the package was necessary to keep Musk focused on running the company, as he also leads other ventures like SpaceX, Neuralink, and X (formerly Twitter).
Musk’s involvement isn’t limited to his businesses. He recently donated millions to Donald Trump’s 2024 presidential campaign and joined Trump on the campaign trail.
Earlier this month, Trump appointed Musk and former presidential candidate Vivek Ramaswamy to lead a new government initiative called the Department of Government Efficiency (DOGE).
The group will work on reducing federal spending and cutting regulations.
With the court’s decision, Tesla may need to reevaluate how it compensates Musk. Meanwhile, his focus remains divided across his various leadership roles and his increasing political involvement.
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