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US judge overturns Musk's billion-dollar pay package at Tesla

US judge overturns Musk's billion-dollar pay package at Tesla

As of: January 31, 2024 4:51 am

Tesla boss Musk is set to part with a pay package equivalent to 50 billion euros. This is what the US court has ordered. That's right for a small shareholder who accused Musk of “unfair enrichment.”

Bad news for the world's richest man: A US court has invalidated electric car pioneer Tesla boss Elon Musk's billion-dollar pay package.

Judge Kathleen McCormick ruled in favor of the Tesla shareholder. Musk and Tesla could not show that the compensation agreed in 2018 — a stock package valued at $56 billion (€52 billion) — was “fair.”

Musk responded to the court ruling on texting service X, previously on Twitter: “Do not register your company in the state of Delaware.” Tesla shares fell more than 3.5 percent in after-hours trading.

Allegation of “Unfair Enrichment”

Tesla investor Richard Tornetta went to court against Musk, Tesla and several members of Tesla's board of directors. Tornetta accuses the 52-year-old multi-billionaire of “unjust enrichment”. At that time, the company's boss was able to impose his conditions on the Tesla board of directors, which was not sufficiently independent.

The defendants were accused of breaching their obligations to the electric car maker and inducing them to squander the company's assets through Kasturi's huge pay package.

According to legal filings, Musk received stock options worth more than $52 billion during the four-and-a-half years the electric car maker hit its goals. Tornetta talks about the biggest salary ever paid to a manager. His lawyers welcomed Judge McCormick's decision, which is still subject to appeal.

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Kasthuri secures salary package

Musk's defense argued that the pay plan was fairly negotiated by an independent board of directors. The deal was subject to high performance and financial targets and was even approved in a shareholder vote that was not actually required.

Musk defended his Tesla pay package during a question in court in November 2022. When the stock package was approved in 2018, investors thought “we're going to fail and go bankrupt,” the multi-billionaire said. “We were in a very difficult situation then, and we lost a lot of money. The probability of survival was very low.”

Claudia Sarre, ARD Washington, tagesschau, January 31, 2024 6:41 am