Why Elon Musk’s $55.8 Billion Tesla Pay Package Was Struck Down in Court

[Magnus]

Why did the judge rule against Musk and Tesla?​

The case stems from a lawsuit filed by a shareholder who argued the pay package should be rescinded, claiming that
the board of directors breached their fiduciary duties to investors. The plaintiff’s lawyers argued Musk exerted too much control over the pay negotiations and failed to disclose crucial information to shareholders. And the large compensation, they alleged, failed to motivate Musk to focus solely on Tesla.

Musk and Tesla in response argued that the nine-month negotiation process was thorough and extensive, and that ensuring Musk’s continued leadership was crucial to the company’s future. They also said the deal included concessions that protected the company and shareholders.

McCormick’s ruling said the package was the largest potential compensation deal for an executive of a publicly traded company, 250 times as large as median peer pay.

Courts typically give boards deference on pay decisions, and it is rare for a judge to strike down a compensation deal. But McCormick concluded that Musk’s role as a “superstar CEO,” with an almost 22% equity stake in the company and thick ties with the directors, “dominated the process that led to board approval of his compensation plan.” She said Musk and Tesla were unable to prove that shareholders were sufficiently informed about the deal before being asked to approve it.

What legal options does Musk have now?​

Musk can appeal McCormick’s ruling to the Delaware Supreme Court, but some legal experts said it may be a challenge for him to mount successful arguments that would save the compensation package.

Given that many companies incorporate in Delaware, does the decision have broader ramifications?​

Some legal observers said the case is so unusual that it doesn’t necessarily change the landscape for executive pay at other companies.

McCormick’s ruling focused on the appropriate process for negotiations, not what the size of an actual pay package should be.

https://www.wsj.com/business/elon-musk-pay-tesla-lawsuit-d4abef21?mod=Searchresults_pos2&page=1

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Musk has every right to a large bonus. But ultimately he bears responsibility to his shareholders and it looks like he couldn't prove in court that the bonus process was transparent to the shareholders.

 

[1srelluc]

Delaware can go to hell, Musk is going to Texas.

 

[martybegan]

Why did the judge rule against Musk and Tesla?​

The case stems from a lawsuit filed by a shareholder who argued the pay package should be rescinded, claiming that
the board of directors breached their fiduciary duties to investors. The plaintiff’s lawyers argued Musk exerted too much control over the pay negotiations and failed to disclose crucial information to shareholders. And the large compensation, they alleged, failed to motivate Musk to focus solely on Tesla.

Musk and Tesla in response argued that the nine-month negotiation process was thorough and extensive, and that ensuring Musk’s continued leadership was crucial to the company’s future. They also said the deal included concessions that protected the company and shareholders.

McCormick’s ruling said the package was the largest potential compensation deal for an executive of a publicly traded company, 250 times as large as median peer pay.

Courts typically give boards deference on pay decisions, and it is rare for a judge to strike down a compensation deal. But McCormick concluded that Musk’s role as a “superstar CEO,” with an almost 22% equity stake in the company and thick ties with the directors, “dominated the process that led to board approval of his compensation plan.” She said Musk and Tesla were unable to prove that shareholders were sufficiently informed about the deal before being asked to approve it.

What legal options does Musk have now?​

Musk can appeal McCormick’s ruling to the Delaware Supreme Court, but some legal experts said it may be a challenge for him to mount successful arguments that would save the compensation package.

Given that many companies incorporate in Delaware, does the decision have broader ramifications?​

Some legal observers said the case is so unusual that it doesn’t necessarily change the landscape for executive pay at other companies.

McCormick’s ruling focused on the appropriate process for negotiations, not what the size of an actual pay package should be.

https://www.wsj.com/business/elon-musk-pay-tesla-lawsuit-d4abef21?mod=Searchresults_pos2&page=1

---

Musk has every right to a large bonus. But ultimately he bears responsibility to his shareholders and it looks like he couldn't prove in court that the bonus process was transparent to the shareholders.

Bull-fucking-shit.

 

[Moonglow]

Delaware can go to hell, Musk is going to Texas.

I am sure he can overpay himself and then claim to be a common person freely in fucked-up-Texass. Not.

 

[Synthaholic]

I posted about this the other day:

Elon Musk has made a serious mistake

Of course there are. Click it again, or continue lying. No, the replies cannot be read. They disappear at the click. Therefore, it has to be originating from X. So far, no USMBer, that is also not an X member, has noticed this fascism.

www.usmessageboard.com

$55B in pay is a ridiculous sum of money. Especially when you just bought someone else's work, someone else's invention with taxpayer money.

Elon has lost confidence from investors. They're not going to just hand him back control of Tesla because he wants it, and because he foolishly paid $44 per share for twitter, decimating his ownership/control of Tesla. What does he own now? 7%? 13%? He's a fool. And you know what they say about a fool and his money.

 

[Hellokitty]

Why did the judge rule against Musk and Tesla?​

” She said Musk and Tesla were unable to prove that shareholders were sufficiently informed about the deal before being asked to approve it.

Too bad congress isn't held to the same standard.

 

[Magnus]

Too bad congress isn't held to the same standard.

You mean like the way the Republicans claim to stop the illegals in public but in Congress doing everything against it?

Yeah, the Repubs are real douchebags, aren't they?

 

[Hellokitty]

You mean like the way the Republicans claim to stop the illegals in public but in Congress doing everything against it?

Yeah, the Repubs are real douchebags, aren't they?

The House passed a border security bill Schumer has yet to take up.

 

[Magnus]

I posted about this the other day:

Elon Musk has made a serious mistake

Of course there are. Click it again, or continue lying. No, the replies cannot be read. They disappear at the click. Therefore, it has to be originating from X. So far, no USMBer, that is also not an X member, has noticed this fascism.

www.usmessageboard.com

$55B in pay is a ridiculous sum of money. Especially when you just bought someone else's work, someone else's invention with taxpayer money.

Elon has lost confidence from investors. They're not going to just hand him back control of Tesla because he wants it, and because he foolishly paid $44 per share for twitter, decimating his ownership/control of Tesla. What does he own now? 7%? 13%? He's a fool. And you know what they say about a fool and his money.

Ridiculous or not, Musk is entitled to a bonus. He single-handedly changed the automotive scene. Running rings around established car companies both domestic and foreign.

But, there needs to be accountability. If he had not issued public stocks and kept his company private, he would have been accountable to no one. But once you go public and have shareholders you are accountable to them.

Checks and balances are in place to make sure that shareholder's monies are protected. Musk may whine but in the end, he will abide. He has to if he continues to seek shareholder investment.

 

[Synthaholic]

I may be wrong but I don't believe you can use taxpayer money for a private corporation. He took the money and was required to be public. He couldn't have done anything with just the money he had from PayPal.

 

[Robert W]

Why did the judge rule against Musk and Tesla?​

The case stems from a lawsuit filed by a shareholder who argued the pay package should be rescinded, claiming that
the board of directors breached their fiduciary duties to investors. The plaintiff’s lawyers argued Musk exerted too much control over the pay negotiations and failed to disclose crucial information to shareholders. And the large compensation, they alleged, failed to motivate Musk to focus solely on Tesla.

Musk and Tesla in response argued that the nine-month negotiation process was thorough and extensive, and that ensuring Musk’s continued leadership was crucial to the company’s future. They also said the deal included concessions that protected the company and shareholders.

McCormick’s ruling said the package was the largest potential compensation deal for an executive of a publicly traded company, 250 times as large as median peer pay.

Courts typically give boards deference on pay decisions, and it is rare for a judge to strike down a compensation deal. But McCormick concluded that Musk’s role as a “superstar CEO,” with an almost 22% equity stake in the company and thick ties with the directors, “dominated the process that led to board approval of his compensation plan.” She said Musk and Tesla were unable to prove that shareholders were sufficiently informed about the deal before being asked to approve it.

What legal options does Musk have now?​

Musk can appeal McCormick’s ruling to the Delaware Supreme Court, but some legal experts said it may be a challenge for him to mount successful arguments that would save the compensation package.

Given that many companies incorporate in Delaware, does the decision have broader ramifications?​

Some legal observers said the case is so unusual that it doesn’t necessarily change the landscape for executive pay at other companies.

McCormick’s ruling focused on the appropriate process for negotiations, not what the size of an actual pay package should be.

https://www.wsj.com/business/elon-musk-pay-tesla-lawsuit-d4abef21?mod=Searchresults_pos2&page=1

---

Musk has every right to a large bonus. But ultimately he bears responsibility to his shareholders and it looks like he couldn't prove in court that the bonus process was transparent to the shareholders.

He satisfied his BOD. That an individual was not happy means the individual is wrong.

I voted on CEO compensation for a Real Estate Board and I definitely believed I was right to fight it. But he won and that is how BOD'S function. I lost and was not pleased. But I did not take the CEO to court over it.

 

[Robert W]

I may be wrong but I don't believe you can use taxpayer money for a private corporation. He took the money and was required to be public. He couldn't have done anything with just the money he had from PayPal.

Are you saying Musk is worth nothing?

 

[Robert W]

Ridiculous or not, Musk is entitled to a bonus. He single-handedly changed the automotive scene. Running rings around established car companies both domestic and foreign.

But, there needs to be accountability. If he had not issued public stocks and kept his company private, he would have been accountable to no one. But once you go public and have shareholders you are accountable to them.

Checks and balances are in place to make sure that shareholder's monies are protected. Musk may whine but in the end, he will abide. He has to if he continues to seek shareholder investment.

Have you ever been a director of a major corporation? I have been and there are legions of whiners. Musk has a habit of doing only great with his money.

 

[Synthaholic]

Are you saying Musk is worth nothing?

Fuck off, jackass.

 

[Robert W]

Fuck off, jackass.

Poor reflection on you. That you refuse to dialogue tells me a lot.

 

[Magnus]

He satisfied his BOD. That an individual was not happy means the individual is wrong.

I voted on CEO compensation for a Real Estate Board and I definitely believed I was right to fight it. But he won and that is how BOD'S function. I lost and was not pleased. But I did not take the CEO to court over it.

Good for you. But the other guy did and won.

Now, Musk should be like you and accept and should not appeal, correct?

 

[Magnus]

I may be wrong but I don't believe you can use taxpayer money for a private corporation. He took the money and was required to be public. He couldn't have done anything with just the money he had from PayPal.

You can use taxpayer money for a private corporation. An example? SpaceX - Musk's other company.

 

[Magnus]

Have you ever been a director of a major corporation? I have been and there are legions of whiners. Musk has a habit of doing only great with his money.

I agree with you that Musk is a great guy and has done a lot. In fact, I said the same thing similar this very thread.

But so what? That gives him license to do anything he pleases with 0 accountability? What the fuck kind of a director were you?

Any corporation with a lame-ass moron like you would not have lasted long.

 

[Tom Paine 1949]

This arrogant super billionaire — and all the other arrogant “Masters of the Universe” on Wall Street, in banking, in government, and in the Republican Party (think Trump) need to be prevented from establishing an irresponsible oligarchy of money and destroying our Republic.

To be sure Elon Musk has demonstrated he is a remarkable industrialist and financier (unlike Trump and so many other “born with a silver spoon” types), having built at least three separate powerhouse companies that paved the way in new fields. But like many successful men he seems to have become too enamored of himself and wandered into areas where he has no expertise, harming himself, his companies, and his investors.

When he let loose his real feelings toward poor people in Bolivia who fought and ultimately defeated an undemocratic coup attempt: “We will coup whoever we want to. Deal with it!” … he exposed what a genuine danger he was becoming.

Who was the “we” he was referring to? Surely not you or I or ordinary working people!

âWe will coup whoever we want!â: the unbearable hubris of Musk and the billionaire tech bros

Challenging each other to cage fights, building apocalypse bunkers – the behaviour of today’s mega-moguls is becoming increasingly outlandish and imperial

www.theguardian.com

 

[Robert W]

Good for you. But the other guy did and won.

Now, Musk should be like you and accept and should not appeal, correct?

I believe that Musk needs more money to support his space missions. So I believe that what the BOD did was correct and the malcontent is not correct. Musk lives so frugally I do not question his use of money at all. He does not even own a home.