December 3, 2024 – On Monday, Judge Kathaleen St. Jude McCormick of Delaware rejected a request from Elon Musk and Tesla’s board of directors to overturn her previous ruling, which ordered Tesla to rescind Musk’s massive compensation package.
Earlier this year, Judge McCormick had determined that there were significant flaws in the negotiation process between Musk and Tesla’s board members regarding his compensation, mandating the withdrawal of the pay scheme. Initially valued at a potential maximum of approximately $56 billion, the package’s worth had fluctuated over the years due to changes in Tesla’s stock price.
Despite Tesla shareholders overwhelmingly reapproving Musk’s 2018 compensation plan in June, Judge McCormick maintained her original verdict. She argued that shareholder votes could not legitimize the scheme. Furthermore, she pointed out that even if shareholder voting could serve as approval, the vote would still be invalid due to several misleading statements in the proxy statement.
In addition to dismissing the appeal, Judge McCormick also significantly reduced the plaintiff lawyers’ requested attorney fees from a staggering 5.6billionto345 million. While acknowledging the methodology used by the legal team to calculate the fees, she adjusted the amount to prevent an “unearned windfall” for the attorneys.
In response, Tesla issued a statement expressing disagreement with the court’s ruling, stating, “The court’s decision is incorrect, and we will appeal.”
