Elon Musk’s $56 billion compensation case fails, victorious attorney demands $6 billion Tesla stocks as remuneration
According to a report by Financial Times, lawyers representing shareholders who defeated Elon Musk’s $56 billion Tesla compensation plan are seeking nearly $6 billion worth of Tesla stock as compensation. Musk is expected to appeal again as he plans to relocate his other companies to another state.
According to previous reports by Chain News, Musk has not received a fixed salary since 2018. Instead, he receives performance-based rewards and bonuses in the form of Tesla stock options at a price of $23.34 per share. However, there is a 5-year lock-up period.
Due to Musk consistently meeting performance targets, he currently owns 12.9% of Tesla’s stock, worth $102.1 billion, according to CNBC.
Tesla shareholders have been dissatisfied with Musk’s focus on acquiring Twitter and have not been able to invest much effort in Tesla’s operations. Finally, they took the matter to court, requesting the reversal of Tesla’s board’s 2018 compensation plan awarded to Musk.
Judge Kathaleen McCormick, who is responsible for this case, ruled last month to revoke Tesla’s board’s 2018 compensation plan, which included multiple batches of stocks worth approximately $56 billion, granted after the company achieved positive operational and financial milestones. The judge believed that Tesla’s board was not independent enough (being too influenced by Musk) and that the governance process for allocation and valuation of the stocks was “unfair” to other shareholders.
Lawyers from Bernstein Litowitz Berger & Grossmann, who are handling the lawsuit, submitted documents to the Delaware court on Friday, claiming that the absolute value of this ruling is “unprecedented.” They are seeking compensation in the form of 29 million Tesla shares, which is 11% of the 267 million shares that Musk received, worth approximately $5.9 billion. They also argued that paying in stock would result in tax savings for Tesla.
The documents state, “The benefit of this structure is that it directly links rewards to the benefits created and avoids taking a penny from Tesla’s balance sheet to pay for the expenses. We are ready to enjoy our dish.”
After seeing the news, Musk responded disdainfully, “Those lawyers who have done nothing but harm Tesla want $6 billion. They are criminals!”
Upon receiving the judgment, Musk complained to the Delaware Court of Chancery and advised other companies to relocate their registered offices to another state. Subsequently, he moved the registration of his two companies from Delaware to Texas and relocated Neuralink to Nevada.
However, lawsuits are not new to Musk. He was previously sued by investors over Dogecoin, and recently he filed a lawsuit against OpenAI and its founder, Sam Altman, claiming that it has become a subsidiary of Microsoft and is purely profit-oriented. It is expected that Musk will appeal again regarding his compensation plan.
Elon Musk
Tesla
