A court invalidates more than US$55 billion in salary compensation paid by Tesla to Elon Musk

a judge of delaware Huge compensation package canceled this Tuesday, January 30 Elon Musk Valued at $55.8 billion by Tesla, The decision, which is subject to appeal, could deal a major blow to the fortunes of the technology billionaire, who is said to be the richest man in the world. forbesWhich estimates his net worth to be $210.6 billion.

Judge Kathleen McCormickone who presides court of Chancery Of delawareCriticized the way the compensation plan approval process was carried out, described “deep flaw”, McCormick noted extensive connections between musk And the agreement’s negotiators are raising questions about the independence and transparency of the process.

As published wall street journalThe decision of this court means that the Council Tesla A new compensation proposal will have to be prepared for muskand comes from the logic of Richard TornettaA shareholder of an electric car company who reported that the company’s board of directors breached its fiduciary duties by providing the tycoon with a performance-based plan, as described in the document “The largest potential compensation opportunity ever seen in the public markets”,

Elon MuskWho is known for his many technology ventures and being the largest shareholder Tesla With a 13% stake, it has tried to tighten its control over the firm. This desire became apparent when, following the recent acquisition of Twitter -Now x-, expressed intention to increase its participation in Tesla It aims to be a leader in artificial intelligence and robotics.

The dispute began in 2018, when shareholders Richard Tornetta Legality of compensation package challenged musk Before the Commercial Law Court of delawareArguing clear manipulation of the approval process and misleading communications to investors.

This was highlighted during musk He had not yet exercised any of his vested stock options, denying that he had imposed the terms of his compensation. This scenario is not alien muskwho, according to The Associated Press, faced similar trials in delaware Regarding the acquisition of solarcity By TeslaQuestions are being raised about his influence on the board of directors.

compensation agreement muskSponsored by the Board of Directors of Tesla In 2017, it was characterized by a non-monetary structure, consisting of twelve tranches of stock options, subject to the fulfillment of certain operational and market valuation milestones. So that musk To turn a profit, the electric car company, which was valued at less than $60 billion at the time and was suffering from financial losses, had to reach a minimum market capitalization of $650 billion, in addition to meeting several revenue and profit targets.

According to Ira EhrenpreisBoard members and compensation committee chairs, sought this structure “Keep him busy” with TeslaWhich managed to overcome the last of these challenges in 2022.

post-judgment action company They experienced a decline of 3.6% after the market closed this Tuesday. In response to failure, musk He criticized the decision in a tweet in which he wrote: “Never incorporate your company in the state of Delaware”A preferred location for many companies due to its tax benefits, pro-corporate laws and privacy policies.