February 27, 2024

Tesla CEO Elon Musk

Tesla CEO takes $51 billion hit to net worth after judge struck down his executive compensation package.
Image: Gonzalo Fuents (Reuters)

Elon Musk was dealt a major financial blow on Tuesday when a Delaware state court judge voided his $56 billion executive compensation package from Tesla.

The ramifications of the historic ruling started to emerge Thursday, when Musk said Tesla shareholders will vote on whether to change the state where the company is incorporated from Delaware to Texas.

Musk made the announcement early Thursday morning on the social media platform he owns X, formerly known as Twitter. Tesla previously moved its headquarters from California to Texas in 2021. Musk cited rising housing costs in the Bay Area as the reason for that move.

“Tesla will move immediately to hold a shareholder vote to transfer state of incorporation to Texas,” Musk wrote following an earlier poll on the site where he asked X users the same question.

“The public vote is unequivocally in favor of Texas,” musk wrote after 87% of 1.1 million voters on his X post approved of the move.

The news came just days after Delaware Chancery Court Judge Kathaleen McCormick ruled that the “process leading to the approval of Musk’s compensation plan was deeply flawed” and was unfair to shareholders. The 2018 package, the largest in history, awarded Musk’s 20.3 million stock options over 12 tranches and was valued at up to $55.8 billion at the time. It helped make him the richest person in the world.

McCormick cited Musk’s strong influence over Tesla’s board of directors as a primary reason for overturning the plan—the first time in history for the typically business-friendly state of Delaware. She pointed out Musk’s decades-long personal and financial relationships with several board members including Ira Ehrenpreis, the compensation committee chair.

“Given the collection of people tasked with negotiating on Tesla’s behalf, it is unsurprising that there was no meaningful negotiation over any of the terms of the plan,” McCormick wrote.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *