judge overturns Musk’s $56 billion compensation plan

2024-01-30 23:15:05

By Le Figaro with AFP

Published 2 hours ago, Updated 2 hours ago

The boss of Tesla, Space X and X (former Twitter), Elon Musk. LUKASZ GLOWALA / REUTERS

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”.

The judge in a court in the state of Delaware, in the eastern United States, ruled in favor of a shareholder of the automobile manufacturer Tesla who requested the cancellation of a compensation plan granted in 2018 to his boss, Elon Musk, estimated at $56 billion. “The judgment is in favor of the plaintiff”concludes the 200-page decision published Tuesday January 30, specifying that the parties must now “discuss among themselves to establish a final decision intended to implement this judgment” et “to put an end to this matter at the trial level”. The trial was held without a jury.

The billionaire posted on the social network X (formerly Twitter), which he owns: “Never locate your company 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.

Part-time boss

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., then 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 improperly authorized in 2018 “the largest compensation plan ever awarded to a manager”.

This plan included resuming Elon Musk Tesla shares based on the achievement of several objectives over ten years. It was estimated at $56 billion when it was adopted. 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, even though he was not working full time for Tesla, as he was also at the head of the space company SpaceX and startups Neuralink and The Boring Company. He also bought the social network Twitter, which he renamed X.

Elon Musk had assured that he had not participated in the development of the plan, although documents shown in court suggested that he had discussed it with members of the board of directors and with executives.