Delaware court voids Elon Musk’s $55.8 billion payday from Tesla in 2018

Key moments

Hold onto your hats, folks, because the courtroom drama involving Elon Musk just took an electrifying turn! A judge in Delaware has hit the brakes on Musk’s jaw-dropping $55.8 billion payday, awarded to him by Tesla in 2018. Why? Well, it turns out some shareholders thought it was an overpayment.

Record-Breaking Payday: Let’s start with the basics – Elon Musk’s $55.8 billion pay deal was an absolute game-changer in the world of corporate compensation. It catapulted him to the ranks of the world’s richest individuals. But was it too much of a good thing?

Flawed Ruling: Judge Kathaleen McCormick wasn’t convinced that this payday was on the level. She ruled that the Tesla board’s approval of Musk’s compensation package was “deeply flawed.” Ouch!

Musk’s Take: Of course, Musk didn’t keep quiet. He hopped onto X (formerly known as Twitter) and dropped this gem: “Never incorporate your company in the state of Delaware.” Yeah, he’s not too pleased with the ruling.

The Tesla Defense: During the week-long trial, Tesla’s directors defended the hefty payout, arguing that it was necessary to ensure Musk’s unwavering commitment to the company. After all, he’s a dynamo, right?

Judge’s Verdict: Judge McCormick saw it differently. She said Tesla and Musk’s legal team “failed to prove that the stockholder vote was fully informed” and that Musk had “extensive ties with the persons tasked with negotiating on Tesla’s behalf.” In other words, it didn’t pass the smell test.

Rhetoric vs. Reality: The judge didn’t mince words, describing the compensation as an “unfathomable sum” that simply wasn’t fair to Tesla’s shareholders. She also pointed fingers at Tesla’s directors, who seemed to have been caught up in Musk’s superstar aura.

Stock Slide: Following this bombshell ruling, Tesla’s stock took a hit, sliding down by roughly 3% in extended New York trading. They’ve already lost more than 20% of their value this year. Ouch!

Musk’s Musings: Musk also posted on X (formerly Twitter) that companies should consider incorporating in Nevada or Texas if they want shareholders to have more say. He even asked his followers if Tesla should relocate its state of incorporation to Texas.

Never incorporate your company in the state of Delaware

— Elon Musk (@elonmusk) January 30, 2024

Control Concerns: Musk has been vocal about his unease regarding Tesla’s investments in artificial intelligence (AI) technology. He’s worried about a potential “takeover by dubious interests” and wants more voting control to steer the ship.

A Multifaceted Mogul: Remember, Elon Musk is not just the head honcho at Tesla; he’s also got a hand in SpaceX, Neuralink, and X (his social media playground), among others.

This courtroom tango between Musk and Tesla shareholders is far from over. Brace yourselves for more twists and turns in the world of the tech titan!