A Tesla shareholder had sued Elon Musk over the compensation arrangement agreed in 2018.
Last night, Finnish time, the US court in Delaware ordered the electric car manufacturer Tesla to fire the company’s CEO Elon Musk’s of the 56 billion dollar, i.e. approximately 51.5 billion euro, fee agreement agreed with
The giant bonus negotiated in 2018 was the largest in US corporate history, the British Broadcasting Corporation BBC write.
With the deal, Musk became the richest person in the world. In November, the financial magazines Forbes and Bloomberg estimated the value of Musk’s assets to be between 180 and 200 billion euros.
Musk’s remuneration is tied to performance targets, such as the value of Tesla shares. Musk does not receive a salary from the company.
Tesla shareholder Richard Thornetta however, considered Musk’s fee excessive and filed a lawsuit. According to Tornetta, the shareholders were not given enough information about how to reach the goals.
Delaware Court Judge Kathleen McCormick agreed with Tornetta’s view. He considered that the Tesla representatives who negotiated the bonuses had not informed the shareholders about the bonus in a relevant manner.
The judge suspected that Tesla’s negotiators might have been mesmerized by Musk’s “superstar nature” and called the Award Agreement “incomprehensible”.
Those who made the agreement have “close connections” with Musk
In addition to Tesla, multi-billionaire Musk has a stake in several other companies.
He owns, among other things, SpaceX, a company specializing in space technology, and Neuralink, a company that develops brain chips. In addition, in October 2022, Musk bought a majority stake in the social media company Twitter, which he later named X.
According to Tesla representatives, the purpose of the bonus arrangement was to encourage the busy Musk to use his time to improve Tesla’s results.
However, Judge McCormick did not find the arguments credible. According to him, Tesla’s representatives were enthusiastic about Musk’s “rhetoric”. The judge also pointed out that those who agreed on the remuneration arrangements had “close connections” to Musk.
Musk immediately expressed his anger at the verdict in the X he owns.
– Never register your company in the state of Delaware, Musk wrote in X and urged companies to move to Texas or Nevada.
Several large multinational companies are headquartered in the state of Delaware due to the light taxation.
The sentence can be appealed to the Supreme Court of the State of Delaware.