SpaceX and Tesla CEO Elon Musk attend the Viva Technology Conference held at the Porte de Versailles Exhibition Center in Paris on June 16, 2023.
Gonzalo Fuentes | Reuters
Elon Musk’s 2018 CEO compensation package is: teslaApproximately $56 billion worth of assets must be restored upon vesting, the Delaware Supreme Court ruled Friday.
“We reverse the Court of Commerce’s rescission relief and award $1 in nominal damages,” the justices wrote in their opinion.
In a ruling issued Friday, the Delaware Supreme Court justices said the lower court’s decision to cancel Musk’s 2018 pay plan was an extreme remedy and that the lower court did not give Tesla an opportunity to say what fair compensation should be.
The ruling on appeal in the case known as Tornetta v. Musk is likely to end a years-long battle over Mr. Musk’s record pay.
Musk’s 2018 CEO compensation package from Tesla consisted of 12 milestone-based tranches of stock, which was unprecedented at the time of the proposal. After it was approved, the pay plan made Musk the richest individual in the world.
A shareholder named Richard J. Tornetta filed a derivative suit in 2018, accusing Musk and Tesla’s board of directors of breaching their fiduciary duties.
In January 2024, Delaware’s Business Chancery Court ruled that the pay plan was improperly granted and ordered it revoked.
In her decision, Treasury Secretary Kathleen McCormick also found that Musk had “control over Tesla” and that the process by which the company’s board approved Musk’s 2018 pay plan was “seriously flawed.”
Among other things, she found that Tesla’s board did not disclose all the important information that investors needed to know before asking investors to vote on and approve the plan.
After the Tornetta decision, Mr. Musk moved Tesla’s legal entity out of Delaware, criticized Mr. McCormick by name in posts on his social network X (formerly Twitter), where he has tens of millions of followers, and called on other entrepreneurs to reincorporate outside the state.
Tesla also sought to “approve” its 2018 CEO pay plan with a second shareholder vote in 2024.
As CNBC previously reported, the law firm currently representing Tesla in this appeal drafted a bill earlier this year that would overhaul Delaware’s corporate law.
The bill, passed by the Delaware General Assembly in March, could have affected the outcome of this case if it had been applied retroactively.
Read the Delaware Supreme Court’s decision here.
This is a developing story. Please check back for the latest information.
