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US Court Halts Elon Musk's Massive Tesla Pay Deal Worth $55.8 Billion

A judge in Delaware, US, has invalidated a substantial $55.8 billion pay agreement granted to Elon Musk by Tesla in 2018. The legal challenge stemmed from a shareholder who contended that the compensation was excessive. Judge Kathaleen McCormick concluded that the approval process by the Tesla board for the pay package was "deeply flawed," as reported by the BBC.

Elon Musk, the billionaire entrepreneur and Tesla CEO, expressed his sentiments on the matter through a post on his platform X, formerly known as Twitter. He advised against incorporating companies in the state of Delaware, where Tesla is currently registered.

Never incorporate your company in the state of Delaware

— Elon Musk (@elonmusk) January 30, 2024

The contested pay deal, the largest in corporate history, played a pivotal role in elevating Elon Musk to one of the wealthiest individuals globally. Throughout the week-long trial, Tesla directors argued that the compensation was necessary to ensure Musk's continued commitment to the company. However, Judge McCormick determined that the board failed to prove the stockholder vote was fully informed and highlighted Musk's extensive ties with those negotiating on Tesla's behalf.

Brian Quinn, a professor at Boston College Law School, noted, "Given the judge found Mr. Musk to be in control of the board, it's hard to justify a transaction like this."

In her 201-page ruling, Judge McCormick criticised the compensation as an "unfathomable sum" that did not serve the interests of shareholders. She also pointed out that Tesla's directors were influenced by Musk's "superstar appeal" during the negotiation process.