{"id":72297,"date":"2024-01-31T02:06:08","date_gmt":"2024-01-31T02:06:08","guid":{"rendered":"https:\/\/entertainment.runfyers.com\/index.php\/2024\/01\/31\/elon-musks-56b-tesla-pay-deal-is-unfair-judge-rules-techcrunch\/"},"modified":"2024-01-31T02:06:08","modified_gmt":"2024-01-31T02:06:08","slug":"elon-musks-56b-tesla-pay-deal-is-unfair-judge-rules-techcrunch","status":"publish","type":"post","link":"https:\/\/entertainment.runfyers.com\/index.php\/2024\/01\/31\/elon-musks-56b-tesla-pay-deal-is-unfair-judge-rules-techcrunch\/","title":{"rendered":"Elon Musk&#8217;s $56B Tesla pay deal is unfair, judge rules | TechCrunch"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div id=\"\">\n<div class=\"article__featured-image-wrapper breakout\">\n\t\t\t\n\t\t<\/div>\n<\/p><\/div>\n<div>\n<p id=\"speakable-summary\">A Delaware judge ruled Tuesday that Elon Musk\u2019s <a href=\"https:\/\/techcrunch.com\/2020\/05\/28\/tesla-board-certifies-elon-musks-payday-worth-more-than-700-million\/\" target=\"_blank\" rel=\"noopener\">$56 billion<\/a> multi-billion pay package is unfair, voiding the largest in compensation deal in corporate history.<\/p>\n<p>The decision, issued Tuesday in the Delaware Court of Chancery by Judge Kathaleen McCormick, means that Musk, the world\u2019s richest person, can\u2019t keep the 2018 compensation package. The ruling can be appealed. <span style=\"font-size: 1rem; letter-spacing: -0.1px;\">Chancery Daily, which follows and shares update on the Delaware Chancery Court, first reported the decision on Threads.<\/span><\/p>\n<p>The ruling doesn\u2019t provide a tidy end for Musk or the Tesla board. How Musk is compensated and what happens to his wealth, which is largely tied up in his many companies, are unanswered questions.<\/p>\n<p>In her ruling, McCormick wrote that <span style=\"font-size: 1rem; letter-spacing: -0.1px;\">Tesla \u201cbore the burden of proving that the compensation plan was fair, and they failed to meet their burden.\u201d<\/span><\/p>\n<p>Musk shared his displeasure with the ruling by turning to X, the social media site formerly known as Twitter that he owns thanks in part to a previous decision by McCormick. The judge oversaw <a href=\"https:\/\/techcrunch.com\/2022\/07\/12\/twitter-sues-elon-musk\/\" target=\"_blank\" rel=\"noopener\">Twitter\u2019s suit against Musk<\/a> that ended in him agreeing to close his $44 billion deal. Musk largely financed the Twitter acquisition by <a href=\"https:\/\/techcrunch.com\/2022\/04\/28\/musk-sells-nearly-4-billion-worth-of-tesla-shares\/\" target=\"_blank\" rel=\"noopener\">selling his Tesla stock<\/a>.<\/p>\n<p>\u201cNever incorporate your company in the state of Delaware,\u201d Musk posted on X. Musk later <a href=\"https:\/\/x.com\/elonmusk\/status\/1752491924848820595?s=20\" target=\"_blank\" rel=\"noopener\">posted a poll<\/a> asking whether Tesla should change its state of incorporation to Texas.<\/p>\n<p><span style=\"font-size: 1rem; letter-spacing: -0.1px;\">This question of \u201cfairness\u201d was central to the case, which kicked off in 2019 when Tesla shareholder Richard Tornetta <a href=\"https:\/\/techcrunch.com\/2022\/11\/07\/musks-56-billion-tesla-pay-deal-goes-to-trial-amid-twitter-overhaul\/\" target=\"_blank\" rel=\"noopener\">filed a suit<\/a> to rescind Musk\u2019s 2018 pay deal, claiming at the time that the package was unjustly paid to Musk without demanding he focus entirely on the carmaker.<\/span><\/p>\n<p>The compensation plan approved by shareholders in 2018 consisted of 20.3 million stock option awards broken up into 12 tranches of 1.69 million shares. Under the agreement, the options vested in 12 increments if Tesla hit specific milestones on market cap, revenue and adjusted earnings (excluding certain one-time charges such as stock compensation).<\/p>\n<p><span style=\"font-size: 1rem; letter-spacing: -0.1px;\">While many may argue that it was fair because the vast majority of shareholders approved it, McCormick was unmoved. She wrote because the \u201cdefendants were <\/span><span style=\"font-size: 1rem; letter-spacing: -0.1px;\">unable to prove that the stockholder vote was fully informed <\/span><span style=\"font-size: 1rem; letter-spacing: -0.1px;\">because the proxy statement inaccurately described key directors as independent and misleadingly omitted details about the process.\u201d<\/span><\/p>\n<p>McCormick described the process leading to the approval of Musk\u2019s compensation plan as \u201cdeeply flawed,\u201d largely because of his deep ties to the people, including board members, who were supposed to be negotiating on Tesla\u2019s behalf. She also noted that testimony illustrated that this was less a negotiation and more a cooperative venture.<\/p>\n<p>McCormick also weighed in the fairness of the \u201cprice.\u201d D<span style=\"font-size: 1rem; letter-spacing: -0.1px;\">efendants urged the court to compare what Tesla \u201cgave\u201d against what Tesla \u201cgot.\u201d Her assessment was not enough. She writes:<\/span><\/p>\n<div class=\"page\" title=\"Page 7\">\n<div class=\"section\">\n<div class=\"layoutArea\">\n<div class=\"column\">\n<p>\u201cThe compensation plan was not conditioned on Musk devoting any set amount of time to Tesla because the board never proposed such a term. Swept up by the rhetoric of \u201call upside,\u201d or perhaps starry eyed by Musk\u2019s 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?\u201d<\/p>\n<p>She did agree that the <span style=\"font-size: 1rem; letter-spacing: -0.1px;\">defendants (Tesla) proved Musk was \u201cuniquely motivated by ambitious goals and that Tesla desperately needed Musk to succeed in its next stage of development.\u201d But, she added, \u201cthese facts do not justify the largest compensation plan in the history of public markets.\u201d<\/span><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div><\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/techcrunch.com\/2024\/01\/30\/elon-musks-56b-tesla-pay-deal-is-unfair-judge-rules\/\" target=\"_blank\" rel=\"noopener\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A Delaware judge ruled Tuesday that Elon Musk\u2019s $56 billion multi-billion pay package is unfair, voiding the largest in compensation deal in corporate history. The decision, issued Tuesday in the Delaware Court of Chancery by Judge Kathaleen McCormick, means that Musk, the world\u2019s richest person, can\u2019t keep the 2018 compensation package. The ruling can be [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":72298,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"class_list":{"0":"post-72297","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-tech"},"_links":{"self":[{"href":"https:\/\/entertainment.runfyers.com\/index.php\/wp-json\/wp\/v2\/posts\/72297","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/entertainment.runfyers.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/entertainment.runfyers.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/entertainment.runfyers.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/entertainment.runfyers.com\/index.php\/wp-json\/wp\/v2\/comments?post=72297"}],"version-history":[{"count":0,"href":"https:\/\/entertainment.runfyers.com\/index.php\/wp-json\/wp\/v2\/posts\/72297\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/entertainment.runfyers.com\/index.php\/wp-json\/wp\/v2\/media\/72298"}],"wp:attachment":[{"href":"https:\/\/entertainment.runfyers.com\/index.php\/wp-json\/wp\/v2\/media?parent=72297"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/entertainment.runfyers.com\/index.php\/wp-json\/wp\/v2\/categories?post=72297"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/entertainment.runfyers.com\/index.php\/wp-json\/wp\/v2\/tags?post=72297"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}