This is a big blow to Elon Musk’s wallet. The judge in a court in the state of Delaware, in the eastern United States, ruled in favor of a Tesla shareholder who requested the cancellation of a compensation plan granted in 2018 to the boss of the manufacturer automobile, estimated at 56 billion dollars.
“The judgment is in favor of the plaintiff,” concludes the 200-page decision published Tuesday, specifying that the parties must now “discuss among themselves to establish a final decision intended to implement this judgment” and “to put an end to this case at trial level.”
Musk angry with Delaware
The billionaire posted on the social network X, which he owns: “Never set up your company’s headquarters in the state of Delaware.” In the wake of the judgment, Tesla shares lost 2.42% in electronic trading after the close of the New York Stock Exchange.
Hearings took place in November 2022, during which Elon Musk defended this enormous compensation plan. “The probability of survival (of the group) was extremely low,” recalled the multi-entrepreneur, ensuring that the manufacturer was very close to bankruptcy in 2018.
Elon Musk was sued, alongside Tesla and certain members of the board of directors, by a shareholder who accused them of having unduly authorized in 2018 “the largest compensation plan ever awarded to an executive”. This plan included giving Elon Musk Tesla shares based on the achievement of several objectives over ten years. It was estimated at $56 billion when it was adopted.
A problem of independence
According to the complainant, Richard Tornetta, the businessman dictated his terms to directors who, given their relationships with him or their personal interests, were not sufficiently independent to oppose them. And this while he did not work full time for Tesla as he was also at the head of the space company SpaceX and the start-ups Neuralink and The Boring Company. He also bought the social network Twitter, which he renamed X.
The trial was also held without a jury. During this meeting, Elon Musk assured that he had not participated in the development of the plan, even if documents shown in court suggested that he had discussed it with members of the board of directors and with executives.