Tesla Fights Back After Judge Rejects Elon Musk’s $55.8 Billion Pay Deal

A US judge, Chancellor Kathaleen McCormick, has upheld her decision rejecting X CEO Elon Musk’s $55.8 billion compensation package at Tesla.

An effort to re-establish the pay deal through a shareholder vote on Monday was denied.

Chancellor Kathaleen McCormick of Delaware’s Court of Chancery ruled that her January decision overrides Tesla’s attempt to ratify Musk’s compensation package through a shareholder vote in June.

The judge stated that Tesla’s ratification bid was littered with “material misstatements” and was therefore flawed.

“The motion to revise is denied.

“The large and talented group of defense firms got creative with the ratification argument, but their unprecedented theories go against multiple strains of settled law,” McCormick held.

Tesla has announced plans to appeal the judgment, stating this via their official X handle:

“A Delaware judge just overruled a supermajority of shareholders who own Tesla and who voted twice to pay Elon Musk what he’s worth,” the automobile company said in a statement.

The company added that the court’s decision is wrong, and if their appeal does not overturn the ruling, it would mean that “judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners – the shareholders.”

Also Read: The Guardian Quits Elon Musk’s X, Cites Far-Right Theories and Racist Content

Retweeting the statement, Musk expressed his opinion about the importance of shareholders controlling votes rather than judges.

“Shareholders should control company votes, not judges,” he wrote.

Musk’s compensation plan, initially backed by shareholders in March 2018, faced legal challenges when shareholder Richard Tornetta filed a lawsuit. Tornetta accused the defendants of failing in their fiduciary duties when they approved the pay plan, alleging that Musk dictated its terms to the directors.

Musk has consistently denied influencing the board’s decision on his compensation plan.