A Delaware judge ruled Monday that Tesla boss Elon Musk remains ineligible for a $56 billion pay package, even though the electric vehicle company’s shareholders voted to reinstate it.
Judge Kathaleen McCormick’s ruling follows her January decision, which called the pay package excessive and vacated it, surprising investors and casting uncertainty on Musk’s future at the world’s most valuable automaker.
Musk did not immediately respond to an emailed request for comment.
Tesla has said in court papers that the judge should recognize a subsequent vote by its shareholders, in June, in favor of the pay package for Musk, the company’s driving force and responsible for many of its advancements, and reinstate his compensation.
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McCormick also ordered Tesla to pay the lawyers who brought the case $345 million, well below the $6 billion they initially requested.
Shareholders also flooded the court with thousands of letters arguing that the January ruling raised the possibility that Musk would leave Tesla or develop some products such as artificial intelligence at other companies.
Lawyers for shareholder Richard Tornetta, who sued in 2018 to challenge Musk’s compensation package, had argued that Delaware law does not allow a company to use a ratification vote to essentially overturn a trial ruling.
McCormick determined in January that Musk improperly controlled the 2018 board process for negotiating the pay package.
The board had said Musk deserved the package because he met all ambitious market value, revenue and profitability targets.
But the judge criticized Tesla’s board for being “beholden” to Musk, saying the compensation plan was proposed by a board whose members had conflicts of interest due to close personal and financial ties to him.
With information from Reuters
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