A Delaware judge ruled on Monday (December 2) that Tesla CEO Elon Musk is not entitled to a $56 billion compensation package, despite a vote by the electric vehicle company's shareholders to reinstate it. The ruling by Chancellor Kathaleen McCormick of the Court of Chancery follows her January decision that deemed the pay package excessive and rescinded it. This decision surprised investors and cast uncertainty over Musk's future at Tesla, the world's most valuable carmaker.

In court filings, Tesla argued that the judge should recognize a subsequent June vote by its shareholders in favor of the pay package for Musk and reinstate his compensation. However, McCormick ordered Tesla to pay the attorneys who brought the case $345 million, well short of the $6 billion they initially requested.

Shareholders flooded the court with thousands of letters arguing that the January ruling increased the possibility that Musk would leave Tesla or develop some products like artificial intelligence at ventures other than Tesla. Attorneys for shareholder Richard Tornetta, who sued in 2018 to challenge Musk's compensation package, argued that Delaware law does not permit a company to use a ratification vote to essentially overturn the ruling from a trial.

After the January ruling, Musk criticized the judge on his social media platform and encouraged other companies to follow Tesla's lead and reincorporate into Texas from Delaware. However, it is unclear if any companies did so.

Fork Report