Elon Musk’s next move in ‘extraordinary’ $56 billion pay battle

Elon Musk could file a lawsuit in Texas to reinstate his $56 billion salary, a legal analyst said.

Delaware Court of Chancery Judge Kathaleen McCormick on Monday rejected Musk’s attempts to acquire $56 billion in Tesla stock over his six years as CEO. automobile.

The move marks McCormick’s second rejection of the billionaire’s salary deal. The judge ruled in favor of the shareholders who considered that the allocation of shares was excessive.

Greg Germain, a professor of corporate law at Syracuse University, said News week that even by corporate America standards, Musk’s stock offering was “extraordinary.”

Germain also noted that although Tesla was previously registered as a company in Delaware, Musk reincorporated the company in Texas after losing in McCormack’s court in January.

He said Musk would likely try to create a new stock package for himself incorporating the old $56 billion deal. News week contacted Musk’s office for comment via email.

“The company has now moved to Texas. Musk might try to get a different opinion from the Texas courts, but I doubt they will succeed,” he said.

“More likely, Tesla will offer Musk a new pay package that repeats the old one, and if ratified, it will be determined by Texas judges rather than Delaware judges, in hopes that Texas judges will be even more business-friendly than those in Delaware,” Germain added.

He said Musk’s options included appealing the Delaware ruling to a higher court, especially since Musk’s stock package had been ratified by Tesla’s board and a majority of shareholders .

The ratification came after McCormick rejected the $56 billion package in January so Musk’s lawyers could strengthen their legal arguments.

“There will likely be an appeal, and I suspect appeals courts may disagree with the judge’s ruling that re-ratification cannot overturn a court decision. If I’m right, the outcome may depend on whether the appeals courts agree with the decision “The trial court’s findings regarding procedural and factual deficiencies,” Germain said.

He added: “Executive compensation is a very controversial topic, as executive compensation in the United States has become astronomical in recent years. Musk’s $50 billion in compensation for essentially six years of work is the most extraordinary ever. »

Eric Chaffee, a business law professor at Case Western Reserve University in Ohio, agrees that Musk’s salary demands were enormous and unprecedented.

“In many cases, a court could have reached a different conclusion, but Musk’s compensation was exorbitant,” he said. News week.

“Superstar executive compensation is legally allowed, but there are limits. Elon Musk’s compensation is an example,” Chaffee added.

Last month, Musk, a close ally of President-elect Donald Trump, was named co-head of the new Department of Government Effectiveness. He has pledged to cut the federal budget by $2 trillion a year.