Musk Record Tesla Pay Plan Rejected Again by Delaware Judge

[BumRushDaShow]

Source: Bloomberg

December 2, 2024 at 4:49 PM EST
Updated on December 2, 2024 at 5:01 PM EST


Elon Musk’s record-setting Tesla Inc. pay package was again rejected by a Delaware judge even after shareholders supported reinstating it.

Despite the June 13 shareholder vote at the company’s annual meeting, Delaware Chancery Court Judge Kathaleen St. J. McCormick decided to stick with her original finding in January that the company’s board was too much under the influence of the billionaire entrepreneur when it adopted the plan in 2018.

The stock options package was initially worth $2.6 billion and spiked to $56 billion by the time the judge canceled it. The package was worth $101.5 billion at Monday’s closing price. McCormick’s ruling striking down the highest-ever pay arrangement for a US corporate executive could take a giant bite out of Musk’s wealth and put the fate of his companies in question if it stands up on appeal.

Even without the payout, he remains the world’s richest person. The ruling comes just after Musk’s wealth hit an all-time high — surpassing the previous record of $340.4 billion set in November 2021 — thanks to a Tesla stock rally following the presidential election and a new funding round for his artificial intelligence startup.

Read more: https://www.bloomberg.com/news/articles/2024-12-02/musk-record-tesla-pay-package-rejected-again-by-delaware-judge

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Changed source.

No paywall (gift)



Original article/headline/source -

Tesla CEO Elon Musk loses bid to get $56 billion pay package reinstated

Published Mon, Dec 2 2024 4:56 PM EST


This is breaking news. Please refresh for updates.

https://www.cnbc.com/2024/12/02/tesla-ceo-elon-musk-loses-bid-to-get-56-billion-pay-package-reinstated.html

[Marthe48]

1. Good!

n/t

[Lunabell]

2. Oh, that's a shame. You know, he was going to donate it to homeless vets,right?

🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣 🤣

[niyad]

3. Oh??. So what movies have you seen lately?

[UpInArms]

4. No one is worth $56 BILLION

and Eloon is just worthless

[onenote]

5. Probably will be a short-lived decision.

He's moved the company to Texas, so if the board and shareholders approve the same compensation package going forward, it almost certainly will be upheld. The shareholders are more than just a little happy with Musk, given that Tesla stock is up 50 percent in the past 12 months.

[BumRushDaShow]

6. CNBC was unusually slow updating - I changed source and from Bloomberg

Despite the June 13 shareholder vote at the company’s annual meeting, Delaware Chancery Court Judge Kathaleen St. J. McCormick decided to stick with her original finding in January that the company’s board was too much under the influence of the billionaire entrepreneur when it adopted the plan in 2018.

[Bengus81]

7. Eloon only owns 13% of the stock. VOTE his ass out of his own Company.....

Or...tell him he can get paid $40,000 or so per year. TAKE it or LEAVE it.

[onenote]

8. His shareholders' approved the pay package. Why would they vote him out?

Tesla stock is up 50 percent in the past 12 months. His shareholders will give him anything he wants. And he moved the company to Texas, so in the future, Delaware court's won't have any say in reviewing his compensation.

[Bengus81]

13. LOL...Then why is he in court trying to get paid and lost? Maybe his "stakeholders" are waking up.

Looks like not all of them love him to the tune of $59B per year.

"A Delaware judge upheld her January ruling in a case brought by shareholders that said the process leading to approval of the pay package was “deeply flawed.”

But hell...pay his POS ass that much I don't own any of his stock, when they start showing EBT losses the stock will tank. Again...he only owns 13% of his own Company.

[onenote]

15. He's in court because a handful of shareholders challenged the pay package in Delaware court.

The court held it was unlawful. So Musk arranged for a shareholder vote in an attempt to get around the court decision. More than 70% of the shares, NOT including shares held by Musk and his brother, voted to approve the pay package. They also voted to move the company's legal place of incorporation from Delaware to Texas. The new court decision ruled against this "ratification" ploy. By the way, those minority shareholders that challenged the pay package asked to be paid a fee over over $5 billion for having won the case. The court reduced that award to $345 million -- still more than $343 million more than plaintiff's actual costs of litigating the case.

So, Musk will appeal the court's decision and while the court's opinion seems sound to me, I have no idea what a Delaware appeals court will think. And, ultimately, if down the road, Musk presents a new compensation plan, and it gets challenged, the case would be heard in Texas and I wouldn't be surprised if it was upheld by a court in Texas, which is where Tesla is physically located. Would you?

Finally, in the months following the June "ratification" vote, the company's stock has doubled in value, from around $175/share to around $350/share. So, in what universe do you think those shareholders won't continue to support whatever Musk wants. I'm not sure what you are referring to when you reference "EBT losses" -- do you mean EBITDA? Because Tesla's year over year EBITDA for the third quarter of 2024 was up 35.5%

[Bengus81]

16. EBT...earning before taxes. Yeah...losses IF they pay his ass $56B per year

Their revenue was what....$96B in 2024? You can't pay one person over 60% of the revenue of a Company. On an update to the story that "package" was going to jump to 101B.

Like I said I don't care because I've never owned that stock and I never will but I've own other blue chips like PPG. NO ONE gets paid anywhere near that obscene amount and the Company continues to show a profit.

[onenote]

18. The pay package was obscene, but it was not $56 billion per year on $96 billion annual revenues.

The pay package, originally approved in 2018, was a ten year compensation package that awarded Musk stock options. The options were divided into 12 "tranches" -- how many option shares he was entitled to claim depended on whether the company met certain financial and operational goals. Ultimately, after taking into account stock splits, the package granted stock option awards for approximately 304 million shares that Musk can buy at about $23.33 each. The company met the target on all 12 tranches of stock option awards but, to the best of my knowledge, Musk hasn't exercised any of the options. Under the terms of the pay package, once he exercises the options he is required to hold the shares for at least five years before selling. The pay package did not award him any guaranteed salary.

That's much different than paying him $56 billion a year. But it still was an unconscionable award that would dilute the value of the shares held by other stockholders.

[Zorro]

9. Musk wants to be the first trillionaire in history

That's his goal and the reason why he wants to crash the economy -- he'll be able to buy stocks for pennies on the dollar.

[Joinfortmill]

10. Obscene compensation.

[Yo_Mama_Been_Loggin]

11. K&R

[Javaman]

12. how much money is that? speculating that there are 350,000,000 people in the US...

each and every person could get $160.00 bucks.

[Abolishinist]

17. And to put his wealth into perspective,

he could keep $10 billion and give away the rest to those 18 and over, which would be around $1,300 per person.

[travelingthrulife]

14. That is a lot of video game tokens in the Tech Bro Death Rally!

Just why does the country have to endure this selfish man baby? He is in the country illegally.