- Musk’s appeal aims to restore his $56 billion pay and avoid a $25 billion charge.
- A US Judge has twice rejected Musk’s his record-breaking compensation.
- The world’s richest man could receive options to buy around 303 million Tesla shares.
Elon Musk might be preoccupied with trying to shrink the federal workforce and fix America’s problems through DOGE, but he’s still found time to appeal the rejection of his $56 billion Tesla compensation package—something a federal judge shot down late last year. Musk, the world’s richest man (in case you’ve forgotten), claims that Chancellor Kathaleen McCormick made a series of legal missteps in blocking his paycheck.
Back in 2018, Musk decided not to take a salary at Tesla. Instead, he struck a deal to buy roughly 303 million Tesla shares at $23 apiece if the company met certain performance and valuation targets. The automaker hit every single one of those targets. But in January 2024, McCormick annulled the pay package, arguing that the Tesla board members who approved it were essentially beholden to Musk.
More: Trump Vows To Buy A Tesla After ‘Radical Left Lunatics’ Boycott Brand
A few months later, Tesla’s shareholders were given a second chance to weigh in on Musk’s compensation. Unsurprisingly, they voted overwhelmingly to reinstate it. However, McCormick quickly shot that down as well, blocking the package for a second time.
In his latest appeal to restore the the package, Musk, along with other defendants, argues that McCormick wrongly applied the “entire fairness” legal standard when reviewing the deal. They contend that she erroneously concluded that Musk’s 21.9% stake in Tesla gave him de facto control over the compensation negotiations. Musk further claims that the judge misinterpreted the relationships among Tesla’s directors, suggesting that they were conflicted during the decision-making process.
Musk’s Defense: “Common Sense, Please”
In the appeal brief, Musk’s team states, “That counterintuitive result defies settled principles of Delaware law, sound corporate governance, and common sense,” according to Reuters. “Musk owned less than a quarter of Tesla’s stock, had no power to dictate terms to the board, and did nothing to dominate or coerce the directors during the transaction.”
Tesla has warned that developing a new compensation plan of equal value could incur a $25 billion charge, Reuters reports. The company argues this makes Musk’s appeal crucial for both restoring his compensation and keeping his attention on Tesla.
When the Judge blocked the pay package for the second time last year, she said that Tesla’s statement to shareholders encouraging them to reinstate the pay contained false and misleading claims, invalidating the vote.
“The proxy statement’s multiple, material misstatements concerning the effect of the stockholder vote, ironically, independently bar that vote from having any ratifying effect,” the judge said in her ruling.
