A Delaware court has thrown out Elon Musk's $55.8 billion Tesla compensation package,xvideos indian saree aunty sex videos ruling that its board of directors breached their legal duty to the company when deciding their CEO's pay. It's a sizeable blow to the multi-billionaire's wallet, and might even put a dent in the richest man in the world's solid gold throne.

In a lengthy 201-page post-trial opinion on Tuesday, Chancellor Kathaleen McCormick found that Tesla's board of directors failed to act in the best interests of the company when determining Musk's compensation package, violating their legal obligation to its shareholders. Instead, they simply followed Musk's proposal and agreed to pay him "the largest potential compensation plan in the history of public markets." 

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Announced in 2018, Musk's 10-year compensation plan would have granted him stock options provided he hit certain operational milestones.

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This substantial compensation package might have still stood if Tesla's board could prove it was fair, or alternatively that most of the minority shareholders were "fully informed" when they approved it. However, the court also found that not only had shareholders not been fully informed, they had actually been misinformed about key factors in the decision making process.

"The process leading to the approval of Musk’s compensation plan was deeply flawed," wrote McCormick.

Musk: '[It was] me negotiating against myself'

The court found Musk had "extensive ties" to the committee of Tesla board members in charge of negotiating his compensation, including business and personal relationships dating as far back as 20 years. At least one director "whose admiration for Musk moved him to tears" acted as a go-between between the CEO and the board, to the point where the court found it unclear whether he was acting for Musk or for Tesla.

"Given the collection of people tasked with negotiating on Tesla’s behalf, it is unsurprising that there was no meaningful negotiation over any of the terms of the plan," wrote McCormick.

The committee even admitted that they approached the task of determining Musk's compensation as a cooperative rather than adversarial process, involving no oppositional negotiations that might have achieved a better result for Tesla. Instead, the company's directors effectively followed Musk's lead and agreed to what he asked for, with the CEO himself stating that the process resulted in "me negotiating against myself."

"Put simply, neither the Compensation Committee nor the Board acted in the best interests of the Company when negotiating Musk’s compensation plan," wrote McCormick. "In fact, there is barely any evidence of negotiations at all. Rather than negotiate against Musk with the mindset of a third party, the Compensation Committee worked alongside him, almost as an advisory body."

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On top of this, the court found that details about how Musk's compensation was determined were "misleadingly omitted" from information supplied to shareholders. 

When shareholders voted on Musk's compensation package in 2018, Tesla claimed that it had been developed by the board of directors alongside a private compensation consulting firm, and that Musk had recused himself from the process. In actuality, it was Musk himself who proposed the size and structure of his compensation, dictating the terms the committee considered and eventually approved. 

"Musk made an initial proposal [regarding the size of his compensation], and that proposal was the only one seriously considered until Musk unilaterally changed it six months later," wrote McCormick.

Shareholders weren't made aware that Musk had authored his own compensation plan, nor were they informed of his close relationship with and dominating influence over Tesla's board members.

"In addition to his 21.9% equity stake, Musk was the paradigmatic 'Superstar CEO,' who held some of the most influential corporate positions (CEO, Chair, and founder), enjoyed thick ties with the directors tasked with negotiating on behalf of Tesla, and dominated the process that led to board approval of his compensation plan," wrote McCormick. "At least as to this transaction, Musk controlled Tesla."

Paying for attention

The court further found that Musk's $55.8 billion package was disproportionate to the value Tesla received from the deal. 

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Tesla's board attempted to argue that Musk's comically large compensation was necessary to keep him and his attention at the company, as well as incentivise him to hit performance targets. However, the court noted that Musk had already made it clear he had no intention of leaving Tesla. In addition, the agreement did not include any requirements that Musk devote a certain amount of time to Tesla, despite his responsibilities at his other companies SpaceX, The Boring Company, Neuralink, and later Twitter/X. 

Musk also already had a 21.9 percent stake in Tesla at the time the compensation plan was approved, giving him "every incentive to push Tesla to levels of transformative growth."

"Swept up by the rhetoric of 'all upside,' or perhaps starry eyed by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?" wrote McCormick.

Of course, none of this means Musk will be going empty handed. Though the court threw out his $55.8 billion compensation package, Tesla's board will now formulate a new agreement to compensate Musk for his work over the past six years. And regardless of what they cook up, the court noted that the stake Musk already had in Tesla has provided him "tens of billions of dollars for his efforts." 

Still, Musk is predictably unhappy that his personal wealth won't skyrocket as much as he had expected. The multi-billionaire is likely to appeal the decision, and has already taken to Twitter/X to express his dissatisfaction — including running a poll asking if Tesla should change its state of incorporation to from Delaware to Texas, "home of its physical headquarters."

"Never incorporate your company in the state of Delaware," Musk posted shortly after the judgement was handed down. "I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters."

The case was brought by a shareholder because Tesla's board did not give them the opportunity to make informed decisions. It doesn't seem as though Musk is interested in such details, though.

Topics Tesla Elon Musk