Recently a judge in Delaware, where Tesla is incorporated,
ruled that the company can't pay Elon Musk a $55 billion package which was an incentive approved by the company's board and shareholders in 2018 to be issued once the company's market valuation reached $650 billion. Some Tesla shareholders later sued on the grounds that they weren't provided all the information about the deal that they should have received before approving it, and the judge agreed:
Defendants were unable to prove that the stockholder vote was fully informed because the proxy statement inaccurately described key directors as independent and misleadingly omitted details about the process. The defendants proved that Musk was uniquely motivated by ambitious goals and that Tesla desperately needed Musk to succeed in its next stage of development, but these facts do not justify the largest compensation plan in the history of public markets.
The issue is that Musk's interests overlapped too closely with six of the eight board members who set the value of the payout, or as the judge wrote: "Ultimately, the key witnesses said it all — they were there to cooperate with Musk, not negotiate against him."
Musk probably will appeal. But he's also expected to try to move Tesla from Delaware to Texas.
Matt Levin has a
fascinating column in
Bloomberg about why that might not work.
