Court Rejects Elon Musk’s $56 Billion Compensation Package for a Second Time
A judge has once again rejected Elon Musk’s $56 billion compensation package, despite Tesla shareholders voting to reinstate it in June. Judge Kathaleen McCormick blocked the plan, stating that Tesla’s board of directors caved to Musk’s influence in accepting the massive payment.
Now valued at $101 billion based on Tesla’s closing share price on Monday, this pay package sets a new record for Musk as Tesla’s CEO. Musk, who is also a prominent advocate for Dogecoin (DOGE), has been at the center of controversy regarding his compensation.
In response to the court ruling, Tesla expressed disappointment, indicating that shareholders had voted twice to approve Musk’s compensation. The company plans to appeal the decision, arguing that it undermines the authority of shareholders in Delaware-based companies.
Court Criticizes Excessive Compensation
This latest court order follows a previous ruling in January where Musk’s pay package was revoked due to its excessive nature. Judge McCormick deemed the sum “unfathomable” and unfair to shareholders, potentially impacting Musk’s future role at Tesla.
In her recent decision, McCormick emphasized Musk’s significant influence over the board as a driving force behind the compensation agreement. She contended that the terms were not entirely fair and that investors were not adequately informed prior to approving the package. McCormick stated:
“There were undoubtedly a range of healthy amounts that the Board could have decided to pay Musk. Instead, the Board capitulated to Musk’s terms and then failed to prove that those terms were entirely fair.”
The lawsuit challenging the compensation package was brought by shareholder Richard Tornetta, resulting in Tesla being ordered to pay $345 million in legal fees to Tornetta’s attorneys. This payment must be made in either cash or company shares.
Following Tesla’s legal setback, Dogecoin experienced a 3.36% decline in the past 24 hours. However, the cryptocurrency has seen a significant increase of 180% over the last 30 days.
Disclaimer: This article is intended for informational and educational purposes only. It does not constitute financial advice or recommendations of any kind. Coin Edition bears no responsibility for any losses resulting from the use of the content, products, or services mentioned. Readers are advised to exercise caution before making any financial decisions.