image copyrightGetty Images
Photo caption,
Musk’s problem, according to experts, is that even after selling a large stake in Tesla, he still considers it his company
January 31, 2024
A judge in the US state of Delaware has annulled the decision of Tesla’s board of directors, which in 2018 decided to pay Elon Musk $55.8 billion as remuneration for his work in the company’s leadership.
As the CEO and largest shareholder of the electric vehicle maker, Musk does not receive a salary as such. Instead, his compensation is tied to key company performance indicators such as share price and profitability.
The value of his 10-year package is now about $51 billion, taking into account changes in Tesla stock prices, Reuters notes.
Musk’s remuneration was challenged in court by one of Tesla’s minority shareholders, Richard Tornetta, who owns only nine Tesla shares.
He demanded that the payment be canceled because, according to him, shareholders did not receive enough information about whether Musk really deserved such a huge sum with his work.
Another plaintiff’s lawyers’ argument was that the board should have acted in the interests of shareholders and offered Musk a lower payout. According to Tornetta, Musk should also have been required to work at Tesla full time, without wasting time on other projects, and if he did not agree to such conditions, to find another CEO.
Many of Musk’s projects
Amit Batish from the Equilar research center (he monitors the remuneration of top managers of large corporations) in 2022 countedthat Musk’s total salary in 2021 was about six times the combined salaries of the world’s 200 highest-paid executives.
image copyrightGetty Images
Photo caption,
Tesla’s new electric vehicle model, the Cybertruck, was unveiled in China on January 24. Now sales of new electric vehicles have stalled and the company’s shares have fallen in price compared to 2018
The amount awarded to Musk was the largest in the corporate history of the United States. She helped him become the richest man in the world. According to Bloomberg and Forbes, as of November 2023, Musk’s fortune ranges from $198 billion to $220 billion.
The trial, which began in November 2022, was preceded by several years of legal wrangling as the parties tried to resolve the issue without bringing it to trial.
Tesla’s board of directors stated that such a huge amount should force Musk to pay due attention to the company.
Sign up for our email newsletter to receive the day’s top stories every evening, Monday through Friday, plus context to help you make sense of what’s happening.
Musk not only heads Tesla, but also manages several other large-scale projects.
He also owns the space company SpaceX and the social network X (which he renamed and which was previously called Twitter).
Musk also owns the company Neuralink, which is developing equipment that allows a chip to be implanted into the human brain for communication with a computer.
Photo credit: Paul Hennessy/Anadolu
Photo caption,
On January 30, Space X’s Falcon-9 rocket launched with cargo to the International Space Station.
Musk’s friends from the board of directors
However, Judge Kathleen McCormick disagreed with the position of the Tesla board of directors. IN 201-page rulingpublished on January 30, she noted that “stimulating” Musk’s interest was not the main reason for the directors’ decision to pay such a huge amount.
image copyrightGetty Images
Photo caption,
Musk sold part of his stake in Tesla to buy Twitter, which he renamed X. Now he wants to return part of the shares of electric vehicle manufacturers.
In her opinion, these people were “hypnotized” by the star status of their often controversial CEO and did not provide the company’s shareholders with enough information to justify their decision.
“It appears that the incredible size of the largest compensation package in history, an unfathomable amount, was intended to help Musk achieve his goal of what he believed was a ‘good future for humanity,’” the judge said in his ruling.
The judge also noted that Musk’s “extensive connections” with members of the commission that determined the remuneration played some role in this decision. As an example, she cited his 15-year business and personal relationship with the chairman of this body, Ira Ehrenpreis.
Elon Musk has been “close friends” for two decades with another commission member, Antonio Gracias, whose investment fund Valor Equity Partners is one of Tesla’s investors.
And two more members of the board of directors: James Murdoch and Johnson Rice, although they were not members of the remuneration committee, took part in discussions and decision-making.
At the same time, Murdoch, as the judge wrote in her conclusion, became a personal friend of Musk after he bought a Tesla car. Musk and Murdoch even vacationed together in Israel, Mexico and the Bahamas.
Overall, five of the six directors who voted to pay Musk the multibillion-dollar bonus “were beholden to Musk” or had their independence in the matter undermined for some other reason.
What Musk said
After the ruling was announced, Tornetta’s lawyer published a statementwhich said “it was a good day for good people.”
Elon Musk reacted to the judge’s decision one single line on his social network X: “Under no circumstances register your company in the state of Delaware.”
Behind it followed another message: “I recommend registering a company in Nevada, or Texas, if you want shareholders to decide its issues.”
He then asked his X followers to take a poll asking whether Tesla should re-register in Texas, where it is headquartered.
Many large companies, including online retail giant Amazon, are registered in the state of Delaware, known for its low taxes.
image copyrightGetty Images
Photo caption,
In Britain, many potential electric vehicle buyers have repeatedly complained about the lack of charging stations. This one is located in the city of Stoke-on-Trent, but there are still significantly fewer of them than petrol stations.
One of Elon Musk’s main problems, according to Brian Quinn, a professor at Boston College Law School, is that “he treats Tesla like his own company without being a controlling shareholder,” he said. in an interview with the BBC.
Musk sold part of his initial stake in Tesla to raise funds to buy Twitter. He currently owns about 13% of the electric vehicle maker, but recently said he wants to reacquire a larger stake.
Experts are confident that Musk will almost certainly will appeal to the decision of the Delaware court.
2024-01-31 18:30:10
#unfathomable #sum #billion #court #annulls #Musks #salary #Tesla #BBC #News
