A Delaware judge has again rejected Elon Musk's record-breaking $56bn pay package at Tesla, ruling that the compensation plan was unfair to shareholders even after a majority voted to approve it.
Court's Second Ruling
Chancellor Kathaleen St. Jude McCormick issued the ruling on Monday, upholding her previous decision from January that threw out the package. The judge found that Tesla's board had failed to demonstrate that the pay plan was fair, despite a shareholder vote in June that re-ratified it.
The package, which was the largest in US corporate history, was initially approved by shareholders in 2018. But a shareholder lawsuit challenged it, arguing that the board was not independent and that the pay was excessive.
Board's Defense and Response
Tesla's board had argued that the June vote should be given deference, but the judge disagreed, stating that the vote did not cure the flaws in the original approval process. The court's decision is a setback for Musk, who has often touted his compensation as tied to Tesla's performance.
Musk reacted on social media, saying that shareholders should have the final say on his pay. Tesla has not yet announced whether it will appeal the decision.
Impact and Next Steps
The ruling could affect Musk's future compensation and his relationship with Tesla, where he remains CEO. The company may need to craft a new pay package or take the case to a higher court.
Legal experts say the decision reinforces the importance of board independence and fair processes in executive compensation. The case is likely to continue, with potential appeals and further litigation.
