Musk seeks to reverse court rulings rejecting his record pay deal twice
Tesla CEO Elon Musk is appealing to restore his $56-billion record compensation in the electric car manufacturer that was rescinded twice in court, according to reports.
Musk filed an appeal this week claiming that the decision of the lower Court of Chancery over his 2018 pay package made multiple errors.
"The Court of Chancery's ratification decision contravenes a fundamental principle of Delaware corporate law: that when stockholders are empowered to act through free and informed voting, they have the final say over the company they own," the appeal read.
The court first shot down Musk's massive pay package in January 2024, with Chancellor Kathaleen McCormick calling it "unfathomable" and unfair to Tesla shareholders because the directors who approved it were beholden to Musk, according to a Reuters report.
Tesla proceeded with another vote in June, where the pay package was approved for a second time. However, this approval was once again dismissed as insufficient to overturn the judge's ruling.
Musk is arguing in his appeal that Delaware law should respect Tesla's shareholders' vote to "hold onto the deal of a lifetime, despite any flaws in its inception."
"The Court of Chancery's unnecessary and unwanted judicial 'protection' has harmed Tesla stockholders in several ways," the appeal read. "They have lost their say in compensating the company's once-in-a-generation CEO, as their votes were disregarded."
The appeal warned that Tesla and its stockholders may suffer further losses if it is forced to negotiate a replacement deal that incurs "tens of billions of dollars in new accounting charges."
"There is no reason to strip a fully empowered and informed stockholder supermajority of the opportunity to make a fresh business judgment about how to move forward," it read. "Principals can ratify the acts of faithless agents, and beneficiaries can ratify the decisions of wayward trustees. Stockholders, too, should be allowed to ratify transactions involving conflicted directors."
According to Reuters, Musk has warned that he wants a greater stake in Tesla or he might develop products outside of the company. He has since encouraged other firms to follow Tesla and SpaceX and reincorporate out of Delaware.
