Controversial Influence
Musk’s and Tesla’s lawyers argued that the new shareholder vote should be sufficient to legitimize the plan. However, Judge McCormick was not persuaded. She specifically pointed out the lack of independence in Tesla’s board when crafting this plan, with Musk wielding disproportionate influence.
Musk Retains His Wealth
Despite this setback, Elon Musk continues to possess a vast fortune, largely due to his 13% stake in Tesla, valued at nearly $150 billion. Tesla has since moved its legal headquarters to Texas, possibly in hopes of crafting a new compensation plan under a different legal framework. Any new plan, however, will need to be meticulously designed to avoid further legal challenges. Some analysts speculate that Tesla might try to merge the cancelled plan with a new proposal to sidestep objections. The situation remains tricky.
A Case That Questions Executive Salaries
This case highlights growing concerns, even in the United States, about the exorbitant compensation of corporate executives. With his $56 billion plan, Musk had set the record for the largest compensation ever awarded to a publicly traded company’s executive. Critics argue that such amounts, while legal, cross ethical boundaries. Shareholders’ lawyers expressed satisfaction with the verdict and are prepared to defend this decision on appeal. Meanwhile, Musk has criticized Delaware’s justice system and might appeal to the state Supreme Court to overturn the decision.
This legal saga could have a lasting impact on corporate governance practices, particularly regarding sensitive issues like executive compensation and conflict of interest management. It remains to be seen whether Musk will manage to secure the jackpot or if he will have to scale back his salary ambitions.