A judge has ruled that Elon Musk’s record-breaking $US56 billion ($84 billion) Tesla pay package could be voided, calling the compensation “an unfathomable sum” that was not fair to shareholders.
Kathaleen McCormick of Delaware’s Court of Chancery found the package was negotiated by directors who seemed beholden to their headline-making CEO and the promise of allowing him to share in the company’s enormous growth.
“Swept up by the rhetoric of ‘all upside’, or perhaps starry eyed by Mr Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?” she wrote in her 201-page opinion.
The ruling, which can be appealed to the Delaware Supreme Court, swept away the largest pay package in corporate America.
The judge’s opinion directed Tesla shareholder Richard Tornetta, who challenged the pay plan in the 2018 lawsuit, to work with Mr Musk’s legal team on an order implementing the decision.
