Judge Stands Firm: Elon Musk's $56B Pay Package Sinks Despite Shareholder Vote

A Delaware judge has rejected Tesla's request to reconsider her decision to scrap CEO Elon Musk's massive $56 billion pay package, even after shareholders voted to approve it again. Judge Kathaleen McCormick explained that Tesla's legal team's arguments were flawed and against established laws. Tesla has the option to appeal, but they've already moved their headquarters from Delaware to Texas. The judge also awarded the plaintiff's lawyers $345 million as fees, much less than the $5. 6 billion they initially asked for.

In 2018, Tesla awarded Musk this pay package when the company was facing a crisis. The package included stock price milestones that Tesla easily met over the years. Richard Tornetta, a former corporate lawyer, sued Tesla over this deal, arguing that shareholders were misinformed due to Musk's strong influence over the company. Judge McCormick agreed with Tornetta in her January opinion. Tesla tried to re-litigate the deal by holding a new shareholder vote in June. They released a new proxy statement that included McCormick's opinion and argued that shareholders were now fully informed. Shareholders approved the deal by a two-to-one margin. However, McCormick found that Tesla's legal team had no valid reason to change her decision based on evidence presented after the trial. She also noted that the common-law ratification idea didn't apply due to Musk's significant influence over the company.

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