Tesla CEO Elon Musk has formally appealed to Delaware’s Supreme Court in an effort to reinstate his $56 billion compensation package. The appeal, filed on Wednesday, reignited the legal battle after Delaware Chancellor Kathaleen McCormick rejected the package for the second time, opening a 30-day window for an appeal back in December. (via Quartz)
The ruling from McCormick came despite a shareholder vote in June, where the majority of Tesla’s investors reapproved the compensation plan. The package, established in 2018, allowed Musk to acquire up to 304 million Tesla shares at a predetermined price of $23.34 per share, contingent on meeting certain performance milestones.
Those milestones were widely seen as nearly impossible to achieve, but Musk was able to guide the company to record growth and meet all of them. Today, Tesla’s stock trading at just under $400 per share.
Tesla has been vocal about their disagreement with the ruling, asserting that it undermines shareholder sovereignty. “This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners – the shareholders,” Tesla stated after the initial rejection.
Musk himself has been outspoken, describing the judge’s decision as corrupt and questioning her impartiality on his social media platform, X.
The package was initially voided by McCormick in January 2024, with the judge pointing out that the process of approving Musk’s compensation was flawed and that the board lacked independence from Musk. Despite the subsequent shareholder vote, McCormick was not swayed, noting that Tesla’s legal arguments were at odds with established Delaware corporate law.
The outcome of this appeal could significantly impact Musk’s financial standing. The CEO currently holds about 13% of Tesla’s stock, which when combined with other companies, gives him a net worth of over $400 billion.
