Update 9:43pm: Adds Musk comment in posting on X.
Elon Musk’s $55 billion pack package at electric vehicle maker Tesla (NASDAQ:TSLA) was voided by a Delaware judge after a shareholder lawsuit claimed his hefty pay package was unduly approved. Tesla fell 1.8% in after hours trading.
The ruling comes after Musk was sued by a shareholder who alleged the performance-based stock option grant approved in 2018 that amounts to over $55 billion was offered and approved by a compensation committee and board that were unduly influenced by Musk and allowed him to become a highly paid part-time CEO.
“Swept up by the rhetoric of `all upside, or perhaps starry eyed by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?” Delaware Chancery Court Chief Judge Kathaleen St. J. McCormick wrote in her opinion on Tuesday.
Musk defended the claims against him at a court hearing in November 2022.
Musk posted a reponse to the court ruling on X on Tuesday.
“Never incorporate your company in the state of Delaware,” the billionaire wrote in a posting on X.
“The parties are to confer on a form of final order implementing this decision and submit a joint letter identifying all issues, including fees that need to be addressed to bring this matter to a conclusion at the trial level,” McCormick wrote in her ruling.
The massive pay package approved in January 2018 started at $0 and only increased based upon certain market cap milestones for Tesla (TSLA) all the way up to a $650 billion valuation. At the time, The New York Times called the package perhaps “the boldest pay plan in corporate history.”