A judge invalidates the $55 billion payout plan Musk gave himself as head of Tesla The Economy

A judge in Delaware ruled this Tuesday in favor of the small investor who challenged the $55 billion payment he made to Elon Musk as the head of Tesla. The plaintiff, owner of nine shares of the electric vehicle maker, denounced the firm for “excessive and unfair enrichment” in 2018, after which he also became the owner of Twitter (currently X) and for consideration that The members of the board of directors did not do so. Act independently by giving him undue permission to decide the details of the compensation plan as he wishes. The tycoon assured before the court in November 2022 that he played no role in finalizing the amount of remuneration and said that when he took over the management his sole objective was to make a leading company in the sustainable automotive sector viable.

Judge Kathleen St. J. McCormick’s decision comes more than five years after the electric car maker’s co-founder received the largest executive compensation plan in history. Tesla’s board of directors must present a new proposal, the creation of which small shareholder Richard Tornetta has been invited by a court decision.

This decision can be appealed to the Delaware Supreme Court. Tesla shares fell 2.8% in after-market trading. In a brief post on the social network X, the magnate wrote: “Never incorporate your company in the state of Delaware.”

With this decision, the future of Musk’s fortune hangs in balance. Worth approximately $51.1 billion, the options were one of its most valuable assets. Without him, his net worth would drop to $154.3 billion, making him the world’s third-richest person after spending most of the last two years in the No. 1 spot, according to the Bloomberg Billionaires Index.

The stock options in his compensation plan have increased over the years as performance goals have been met, but regulatory filings show he has not yet exercised any options.

During the week-long trial, executives at Tesla, the world’s most valuable car company, argued that the company is paying off to ensure that one of the world’s most dynamic entrepreneurs, given its diversity, keeps its eye on the electric vehicle maker. Will continue to focus. Business interests and the risk of their efforts going astray. Antonio Gracias, Tesla’s director from 2007 to 2021, called the package “a great deal for shareholders” because, he said, it brought extraordinary success to the company, which had come into question due to crashes of some models.

Dissatisfied with the explanation, small shareholder Tornetta considered the payment received by Musk to be excessive, which he claims never discussed with the board of directors and also set or imposed the terms of the agreement as too low. However, documentation from the case shows that the businessman was asked in a text by his friend, Tesla board member, Ira Ehrenpreis, on April 8, 2017, how he would assess his future compensation. Musk responded that he should “own 10% of the company” in a compensation plan built around progress of objectives that would gradually give him 1% of the shares outstanding. Musk later commented in an email to one of the co-founders that he was “planning something really crazy, but high-risk.”

Musk has competed several times with French luxury czar Bernard Arnault for the title of world’s richest man. If the Delaware judge’s decision is confirmed, he will be ranked second in the billionaires club.

The Delaware ruling invalidating the payment plan is the billionaire’s second defeat in court, after failing to persuade an appeals court last May to release him from a 2018 settlement with the Securities and Exchange Commission. Being able to tweet about Tesla without the permission of the United States (SEC, the stock market regulator) and your lawyer. Musk, who prides himself on disregarding corporate regulations, has yet emerged victorious from other court battles.

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(TagstoTranslate)economy(T)Elon Musk(T)Tesla Motors(T)Twitter(T)SEC(T)Stock Market(T)Salaries(T)Companies

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