A Delaware judge has once again rejected Tesla CEO Elon Musk’s $56 billion compensation package, despite the plan being approved twice by over 72% of Tesla shareholders.
Judge Kathaleen McCormick upheld her earlier decision to strike down the pay package, prompting Tesla to announce plans to appeal to the Delaware Supreme Court.
Tesla strongly criticized the ruling, claiming it undermines the authority of shareholders. “A Delaware judge just overruled a supermajority of shareholders who own Tesla and who voted twice to pay Elon Musk what he’s worth,” Tesla said in a statement.
The company called the decision “wrong” and warned of its broader implications. “This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners – the shareholders.”
The compensation package, tied to ambitious performance goals, has been a point of contention, with critics questioning its size even if Musk meets the targets. Tesla’s decision to appeal highlights the ongoing battle over corporate governance and the balance of power between shareholders and judicial oversight in executive compensation decisions.
Musk commented, “shareholders should control company votes, not judges.”
The outcome of the appeal could set a significant precedent for shareholder rights in determining how top executives are paid. It also sets a precedent for startups seeking to start their companies in Delaware, as a judge can overrule shareholders.
