A Delaware judge has blocked Elon Musk’s massive Tesla pay package for the second time this year, ruling that the company’s vote to approve the payout doesn’t change anything.
On Monday, Delaware Chancery Judge Kathaleen McCormick rejected calls from Tesla to authorize Mr. Musk’s $56 billion deal. She said that while the electric vehicle giant’s shareholders may have endorsed the package, it doesn’t alter the law.
“The large and talented group of defense firms got creative with the ratification argument,” Judge McCormick wrote. “But their unprecedented theories go against multiple strains of settled law.”
Tesla shareholders met this year to vote on the pay package, which was initially approved in 2018. While prominent Tesla investors objected to the deal, the stakeholders overwhelmingly endorsed it in a nonbinding vote in June.
Judge McCormick originally blocked Mr. Musk’s record package in January after several Tesla investors challenged the payout. The plaintiffs in the case argued that Mr. Musk had too much control over Tesla’s board of directors, hence bolstering his compensation influence.
“We hope that the chancellor’s well-reasoned decision will end this matter for the shareholders of Tesla,” Bernstein Litowitz Berger & Grossmann, the law firm for the plaintiffs, said in a statement.
Mr. Musk hit back, posting on X Monday, “Shareholders should control company votes, not judges.”
Tesla backed up Mr. Musk shortly afterward, vowing to appeal the decision.
“The court’s decision is wrong, and we’re going to appeal,” the company wrote on X. “This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners — the shareholders.”
The CEO blasted her original dismissal of the pay package and has vowed to move Tesla’s incorporation out of Delaware.
• Vaughn Cockayne can be reached at vcockayne@washingtontimes.com.
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