A Delaware appeals court on Friday cleared the way for businessman Elon Musk to receive a long-contested US$56 billion Tesla Inc pay package, reversing an earlier judgement in the protracted case.
The decision by the Delaware Supreme Court rejected a pair of judgments by Delaware Court of Chancery Chancellor Kathaleen McCormick and sets the stage for the world’s richest person to get another windfall.
In a pair of rulings last year, McCormick invalidated the 2018 package, which once loomed as historically large, but have since been eclipsed by the tech tycoon’s most recent Tesla package.
Photo: Reuters
The five-judge appeals panel determined that McCormick ruled improperly in ordering a rescission, the tossing out of Musk’s package in its entirety.
“It is undisputed that Musk fully performed under the 2018 grant, and Tesla and its stockholders were rewarded for his work,” the ruling said as it reversed the rescission.
Although it was approved by a majority of Tesla’s shareholders, the 2018 package ended up in court when Tesla shareholder Richard Tornetta challenged the award as excessive.
In a statement posted online on Friday, attorneys representing Tesla shareholders said they were considering next steps.
The court struck down the award in January last year following a five-day trial, calling the process “deeply flawed.”
The board proved vulnerable to manipulation by Musk, “the paradigmatic ‘Superstar CEO,’” wrote McCormick, who upheld her determination in December last year following an appeal.
Tesla’s board has staunchly supported Musk throughout the legal saga, approving an “interim” compensation award in August worth about US$29 billion for him and then unveiling another pay package worth as much as US$1 trillion.
Tesla shareholders on Nov. 6 easily approved the latest package, which is tied to a number of performance and valuation targets.
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