Tesla urges Delaware court to restore Musk’s $56bn payday
Key Takeaways
- Tesla attorneys argued before the Delaware Supreme Court to reinstate Elon Musk's $56 billion pay package, voided by a lower court in January 2024.
- The core of Tesla's argument is that the 2022 shareholder vote to restore the pay was highly informed and should be respected.
- The case's outcome is critical for Delaware's corporate law, as the initial ruling has spurred companies to move their incorporation elsewhere ('Dexit').
- The lower court had found the board lacked independence and shareholders lacked key information when the original 2018 package was approved.
- If the appeal fails, Musk will still receive tens of billions through a replacement compensation deal agreed upon by Tesla.
Tesla attorneys presented their case to the Delaware Supreme Court, urging the restoration of CEO Elon Musk's record $56 billion compensation package that a lower court judge rescinded earlier this year. The Tesla lawyer emphasized that the 2022 shareholder vote reapproving the package was 'the most informed stockholder vote in Delaware history.' This case carries substantial weight for Delaware, as the Court of Chancery's ruling against the pay package has fueled criticism and led to corporate relocations to states like Texas and Nevada, a trend dubbed 'Dexit.' The defense argued the lower court misinterpreted facts and law, suggesting the remedy of rescinding the pay was improper. Conversely, the plaintiff's attorney argued that allowing ratification after a court ruling would lead to interminable lawsuits, maintaining the original ruling was based on settled law concerning the largest pay package in history. Even if the appeal fails, Musk stands to gain billions from a replacement deal agreed upon by Tesla.
