Now 100 billion dollars: Court rejects share package for Elon Musk again

Tesla CEO Elon Musk's share package worth tens of billions of US dollars has once again failed in court. The competent judge in the US state of Delaware has once again rejected the shareholders' distribution plan, which was renewed in the spring. "The large and talented group of attorneys" may have gotten creative in their arguments, she now writes, but their unprecedented theories run counter to applicable law in several ways. There are several "fatal flaws".

More than 100 billion US dollars for Musk

The legal dispute concerns a remuneration plan for Musk that was originally worth 2.6 billion US dollars. The CEO was to receive the money in the form of shares, provided they reached certain price targets during the term and Tesla achieved specified financial figures. Due to the strong increase in the value of the shares, the total value eventually rose to 56 billion US dollars, and yesterday, Monday, the shares were worth over 100 billion US dollars, reports Reuters.

In January, Judge Kathaleen McCormick justified her rejection of the package by pointing out that the Board of Directors responsible for it had been misled twice. The responsible members were described as independent of Elon Musk, although they were not. Rather, he had maintained close ties with them and granted them generous remuneration. Furthermore, there had been no real negotiations about Musk's remuneration. He was also not obliged to provide certain services or work hours.

Clear words from the judge

Following the rejection of the share package at the beginning of the year , Tesla shareholders approved it again in mid-June. However, they did not convince the judge. You cannot overturn a judgment with evidence that is produced afterwards, she wrote, among other things. In addition, new arguments were only put forward after the ruling – and therefore too late. And even if a new vote could enable the package to be approved, in the present case this would be prevented by "several material misstatements" in the relevant documents.

If the court were to accept that losing parties create new facts after a ruling in order to revise rulings, court proceedings would take forever, McCormick writes. Meanwhile, she has approved that the lawyers who initiated the lawsuit will receive 345 million US dollars – they had originally demanded 6 billion US dollars. Despite the discount, this is the largest sum in such proceedings. Tesla and Elon Musk have rejected the verdict and immediately announced their intention to appeal.

(mho)