Musk’s 56 billion super salary is “excessive”: judge blocks it

For the second time, a court in Delaware ruled that Elon Musk’s $56 billion salary package as Tesla CEO was “unfair and excessive” and blocked it. The decision was made by Judge Kathaleen McCormick of the Court of Chancery, an equity court that deals with corporate law. It was already decided to cancel Musk’s huge salary in January, but it was reinstated by the decision of Tesla shareholders in June.

Musk’s reaction

In response to the decision, Musk wrote:

The company vowed to appeal the decision, saying it was a “wrong” decision. Tesla wrote on his

Because the judge “cancelled” the maximum salary

Musk’s compensation package (which includes not only salary but also stock and other benefits) was first approved in 2018. Last January, the Court of Chancery ruled in favor of a shareholder who appealed to the court, claiming that the board of directors had filed a lawsuit for damages. He decided to donate such a staggering sum to Musk in a non-independent way.

Some major shareholders, including Norway’s sovereign wealth fund and California’s state teachers’ retirement system, also voted against approving the pay package, but to no avail.

A shareholder vote to reinstate the sum was passed in June with a 75 percent vote in favour, but the judge disagreed that the pay should be so high, despite arguments from Tesla’s lawyers that he described as “creative.” “Although a shareholder vote has a confirmatory effect, it cannot do so in this case,” the judge wrote.

Judge McCormick had motivated the initial decision to cancel Musk’s salary by stating that negotiations with the board would be “deeply incomplete” because of the executives’ “deep ties” between themselves and Musk, described as a “superstar CEO.” Has the ability to influence the board of directors in decisions.