A Delaware judge ruled that Tesla CEO Elon Musk still is not entitled to receive a $56 billion compensation package despite shareholders of the electric vehicle company voting to reinstate it.
The ruling by the judge, Chancellor Kathleen McCormick of the Court of Chancery, follows her January decision that called the pay package excessive and rescinded it, surprising investors, and cast uncertainty over Musk’s future at the world’s most valuable carmaker.
Tesla has said in court filings that the judge should recognize a subsequent June vote by its shareholders in favor of the pay package for Musk, the company’s driving force who is responsible for many of its advances — and reinstate his compensation.
McCormick said Tesla’s board was not entitled to hit “reset” to restore Musk’s pay package.
“Were the court to condone the practice of allowing defeated parties to create new facts to revise judgments, lawsuits would become interminable,” she said in her 101-page opinion.
She also said Tesla made multiple material misstatements in its proxy statement regarding the vote and could not claim the vote was a “cure-all” to justify restoring Musk’s pay.
“Taken together,” the problems with Tesla’s arguments “pack a powerful punch,” she wrote.
Tesla shares fell 1.4% in afterhours trade, following the ruling.
McCormick also ordered Tesla to pay the attorneys who brought the case $345 million, well short of the $6 billion they initially requested. She said the fee could be paid in cash or Tesla stock.
Musk and Tesla can appeal to the Delaware Supreme Court as soon as McCormick enters a final order, which could come as soon as this week. The appeal could take a year to play out.
