Elon Musk can’t keep $55 billion Tesla pay package, Delaware judge rules

Elon Musk might not hold a Tesla pay bundle price greater than $55 billion, a Delaware decide dominated on Tuesday, saying that the Tesla CEO and his firm did not show that the huge payout was honest.

The ruling comes 5 years after a shareholder lawsuit accused Musk and Tesla’s board of administrators of breaching their duties to the electrical car producer, losing company belongings and unjustly enriching the billionaire.

Tesla shares slid 4% in after-hours buying and selling.

Musk had testified in November that he did not attend any conferences the place the plan was mentioned by Tesla’s board or its compensation committee, and denied that he had a hand in setting the phrases of the payout. However Chancery Court docket Choose Kathaleen McCormick wrote in her ruling that Musk and his attorneys did not show that the compensation plan was honest.

“[T]he defendants bore the burden of proving that the compensation plan was honest, and so they failed to satisfy their burden,” McCormick wrote within the resolution, which was posted on-line by Bloomberg Information.

She added that Musk, Tesla and their attorneys additionally did not show that the milestones that Musk needed to meet to obtain the pay bundle had been tough to achieve, and stated that different elements of their protection did not make their case.

“The defendants maintained that the plan is an distinctive deal when in comparison with personal fairness compensation plans, however they didn’t clarify why anybody would examine a public firm’s compensation plan with a non-public fairness compensation plan,” she added. “The defendants insisted that the plan labored in that it delivered to stockholders all that was promised, however they made no effort to show causation.”

After the decide launched her ruling, Musk wrote on X, previously generally known as Twitter, “By no means incorporate your organization within the state of Delaware.”

—With reporting by the Related Press.