Elon Musk, the owner of the world-famous EV brand Tesla and a close associate of the current Trump administration, is not ready to back down in his $56b payout battle. His legal team has yet again filed an appeal to the Delaware Supreme Court challenging Chancery Judge Kathaleen McCormick’s prior judgment. Musk stated the judge made several legal errors when she rejected his package. This article brings all the details you must know about Elon Musk’s $56B Tesla payout battle.
Elon Musk’s $56B Tesla Payout Battle: Statements From His Legal Team
His legal argued that McCormick was wrong to void Musk’s CEO compensation claiming it was unfair to the investors. The lawyers told the Delaware Supreme Court about the benefits these investors have received under his motivated and exceptional leadership. They also argued that his continuative results have defied the principle already settled in the Delaware law, sound corporate governance and common sense.
Elon Musk’s $56B Tesla Payout Battle: What Is It All About?
If you are someone who doesn’t know about Musk’s ongoing payout battle, the Tesla board approved the compensation deal in 2018. It would have given Musk several awards based on performance. It would have also offered several options valued at the $56 billion mentioned before. This would have been contingent upon Tesla meeting market capitalization as well as operational successes. It is also important to note that the value of the package is largely tied to the share value of the company. It has deflated to $48 billion after the re-ratification from the shareholders. It has likely changed again since the share price keeps fluctuating. It moved down to 35% to date and up 40% in the past 12 months.
How Did The Elon Musk’s $56B Tesla Payout Battle Begin?
The battle Elon is still fighting related to his $56B Tesla payout started when one of his shareholders Richard Tornetta filed a derivative lawsuit in 2018. He sought the court on behalf of Tesla to halt the compensation deal. His team argued how Musk’s personal ties to multiple board members had undue influence on the decision. It significantly compromises the fairness of the deal. Judge McCormick agreed to his arguments. Tesla shareholders later reinstated the package. However, she still affirmed her decision claiming the proxy statements had multiple misleading claims.
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Elon Musk’s Legal Team Denied The Allegations Of Undue Influence
His legal team claimed McCormick was wrong with her decision to void Musk’s compensation package on grounds of undue influence. In their appeal to the supreme court, the team denied the allegations saying Musk owned less than a quarter of Tesla’s stock. Therefore, he had no power to dictate his terms to the members of the board.
They also claimed he did nothing to dominate the decisions of the directors. The legal team also argued there is no evidence to prove Musk would have accepted a lower package if offered as the judge claimed. They also credited Musk for growing the company up to 1400% in hopes of compensation. The team added that the re-approval of the package from shareholders should have been enough to override the initial judgment.
Tesla’s Current Performance Amid the $56B Payout Battle
The share prices of Elon Musk-owned Tesla did reach an all-time high with Trump coming into power. However, the value of the company then deflated to the point it erased the gains earned post-election. Today, Tesla is one of the worst-performing companies in the S&P 500. This is mainly because of the dissatisfaction of the customers from his recent political involvement. DOGE cutting down the spending of multiple federal organizations has seemingly affected Tesla.
