A US court on Monday reaffirmed its decision to reject Tesla boss Elon Musk’s $56 billion compensation package, despite support from Tesla shareholders.
The Delaware judge upheld her January ruling that Musk is not entitled to his multi-billion dollar compensation package, saying Musk had too much influence behind the scenes when the stock grant plan was approved in 2018 to be considered due process .
Based on Monday’s closing price, the package is now worth $100 billion, following a significant increase in Tesla’s share price.
Judge Kathaleen McCormick of the Delaware Court of Chancery, a leading U.S. business court, also awarded the plaintiffs $345 million in damages. They had requested $5.6 billion, based on the legal principle that a percentage of the benefit ($56 billion) should be received.
“In a case about excessive compensation, that was a bold ask,” McCormick wrote in her 103-page op-ed. The plaintiffs can choose to have the $345 million paid out in cash or Tesla stock, she said.
In January, McCormick ruled that Musk, as part of Tesla’s board of directors, had exerted too much influence over the generous pay from the sidelines of negotiations.
The judge argued that shareholders had been kept in the dark about his involvement, meaning they did not have the opportunity to make an informed decision, which led to the judge siding with the plaintiff who rejected the deal with Musk wanted to dissolve.
In June, Tesla shareholders reapproved Musk’s multi-billion dollar pay package, but this did not guarantee Musk’s victory in court. Tesla can still appeal the decision.
