A Delaware state court in the US has canceled Tesla's $55.8 billion pay package to ex-boss, (former Twitter), Tesla CEO and billionaire businessman Elon Musk.
In 2018,
electric car company Tesla paid CEO Elon Musk this amount due to successful
performance.
According
to a BBC report, the Delaware Supreme Court of the United States has ruled in
favor of freezing the company's $55.8 billion, stating that Tesla's board's
approval of the salary package was flawed.
The
lawsuit was filed by a Tesla shareholder. His complaint was that Tesla is
spending extra money in the name of salary.
The rule was
announced on Tuesday after a week-long trial in a Delaware court. In a 201-page
ruling, Judge McCormick said the amount was excessive and unfair to the
remaining shareholders. The pay deal was the largest in corporate history.
What will the Tesla board do?
Tesla board members now face a “tornado situation,”
according to Wedbush Securities analyst Daniel Ives.
They must negotiate a new pay package that has the approval
of shareholders and of Musk, who recently demanded an increase in his ownership
stake in the company, appeal the judge’s decision or change where Tesla is
incorporated.
How did Elon Musk react to the ruling?
In reaction Musk is now thinking of relocating his Tesla
business to Texas. On X, he asked his followers to vote if Tesla should
incorporate in Texas, a more business-friendly state where it has its corporate
offices and a factory.
“I recommend incorporating in Nevada or Texas if you prefer
shareholders to decide matters,” he wrote.
A post shared by Elon Musk on X on Wednesday said the Judge who
rescinded his $55 billion Tesla compensation package was Kathaleen McCormick. McCormick
also ruled against Elon Musk during his Twitter acquisition.
Before becoming the head of the Delaware Chancery Court,
McCormick worked at a Delaware law firm called Young Conaway. This firm and its
employees have been major donors to President Joe Biden for decades.
In 2016, Hunter Biden hosted a gubernatorial campaign event
for Congressman John Carney, with then-Vice President Joe Biden as the guest
speaker. This event took place at the Law Offices of Young Conaway in
Wilmington, Delaware.
How much Tesla stock does Elon Musk own?
Even without the stock from the pay package, Musk owns about
411 million Tesla shares, worth approximately $78 billion.
Read more: Elon Musk visits site of Auschwitz Nazi German death camp
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