The drama is back on the Tesla stage. A high-profile ruling on CEO Elon Musk's $55 billion compensation incentive package is eye-catching. In this battle between shareholders and management, the judge's ruling is in focus. Tesla shareholders sued Musk in 2022 for alleging that he improperly received up to $55 billion worth of CEO compensation awards, a plan that has now been ruled invalid by a Delaware court.
Behind the ruling is Tesla shareholders' doubts about Musk's past compensation package. Musk's post on X Social ** warning companies not to register in Delaware has sparked more attention and questions. The court found that there was a lack of fairness in Tesla's huge option award package that Tesla granted to Musk in 2018, but Musk has received all the awards with a total value of more than $55 billion, which means that it is still unknown whether he will need to return some of Tesla** options.
The lawsuit stems from a 2018 decision by Tesla shareholders to vote to grant Musk a $55 billion CEO compensation package. At the heart of this plan was that Tesla had to achieve phenomenal market capitalization and profit growth, and Tesla did exactly that. Now, however, shareholders have changed their minds.
Some shareholders accused Musk of misleading them, claiming that the plan was developed by an independent board of directors, while they felt that Musk had unfairly received an extremely generous compensation plan. The case went to trial in 2022, but the judge has been slow to give a verdict.
Recently, Musk posted on social media that he must gain 25% control of the company's votes, which caused widespread public concern and forced the judge to make a ruling.
Judge Catherine chose to support the shareholder's claim, arguing that the compensation plan should be reviewed according to a standard of full fairness, and that the defendant (i.e., Musk) needed to prove the fairness of the compensation plan, but he failed to do so.
Judge Katherine held that both the plaintiff and the defendant should negotiate the form of a final order to enforce this award and submit a joint letter identifying all issues, including the costs that need to be resolved, in order to conclude the matter at the trial stage.
This ruling not only affects Tesla's internal affairs, but also has become the focus of attention of investors and entrepreneurs around the world. As the courtroom drama continues, the story of Tesla and Musk is destined to spark more controversy and attention.