Elon Musk’s 2018 compensation plan from Tesla, which was valued at around $56 billion, has been upheld by the Delaware Supreme Court. This ruling means that the controversial pay package, once seen as overly generous, will not be revoked after all.
The judges decided that the lower court’s earlier move to cancel Musk’s pay plan was too harsh. They noted that Tesla hadn’t been allowed to argue how much they thought was fair compensation. This ends a long-running legal dispute known as Tornetta v. Musk.
Musk’s current net worth is estimated at about $679.4 billion, according to the Forbes Real-Time Billionaires list. Experts like Dorothy Lund from Columbia Law School pointed out that while the pay package is reinstated, other parts of the earlier court ruling remained intact. She highlighted that Musk was classified as a controlling shareholder and that the approval process for his pay package wasn’t fair.
The case started in 2018 when Tesla shareholder Richard J. Tornetta accused Musk and the board of not fulfilling their duties. Following a January 2024 ruling that deemed the pay plan improper, Tesla tried to rectify it by holding another vote. However, in November, shareholders agreed to an even larger compensation plan for Musk, potentially worth $1 trillion over the next decade.
Significantly, this plan could increase Musk’s control over Tesla, raising his voting power from around 13% to nearly 25%. This might reshape the company’s future and influence its direction.
Law experts say this case might set important precedents in corporate governance. As Tesla navigates these waters, it’s essential to watch how it impacts not just Musk’s fortune but also the wider conversation about executive pay and shareholder rights.
For a deep dive into the Supreme Court’s ruling, you can find it here.
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