A Delaware judge has denied Elon Musk’s effort to reinstate his massive $56 billion Tesla compensation package, initially approved in 2018. Delaware Chancery Court Judge Kathaleen St. J. McCormick rejected Musk’s motion on December 2, citing “at least four fatal flaws” in the arguments presented by his attorneys. The package, which sparked a shareholder lawsuit alleging breach of fiduciary duties and unjust enrichment, was reauthorized by Tesla shareholders in August 2024, but McCormick deemed this effort procedurally insufficient to overturn her earlier ruling blocking the payout.
McCormick criticized Musk’s attempt to justify the package through a second shareholder vote, dismissing his legal team’s argument of “common law ratification” as baseless and unsupported. The judge also highlighted material misstatements in Tesla’s proxy statement, rendering the reauthorization vote ineffective. While Musk’s attorneys contended that shareholders fully understood and supported the pay package, McCormick maintained that no grounds existed to reverse her January 2024 decision.
In addition to denying Musk’s appeal, McCormick rejected a $5 billion legal fee request from the plaintiff’s attorneys, awarding them $345 million instead. Tesla shares dipped 1.3% in after-hours trading following the decision, but the stock has surged 47% over the last month. Despite the legal setback, Musk remains the world’s wealthiest individual, with an estimated net worth of $343 billion, according to the Bloomberg Billionaires Index.
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