An American judge refused this Monday, for the second time, to approve that Tesla pay around $56 billion to its CEO, Elon Musk. Magistrate Kathaleen McCormick, of the state of Delaware, did authorize Tesla shareholder Richard Tornetta, who initiated the case against Tesla and Musk in 2018 when he considered that the payment was excessive, to receive compensation of $345 million. Tornetta had requested $5.6 billion.
In February of this year, McCormick had already annulled the agreement by which the Tesla board of directors approved in 2018 to pay Musk with a package of stock options of the automobile company valued at 56,000 million. The deal allows Musk to buy 20.3 million shares in groups. Each group has a special price established, which means that if it is lower than the real value of the shares at the time of executing the option, the businessman will make great profits.
The stock option package was conditional on Tesla reaching 12 goals, including a market capitalization of at least $50 billion and certain revenue targets. Tesla met all the goals, but McCormick annulled the agreement by pointing out that Musk maintained deep personal relationships with the people who had to decide the amount of compensation and that the board of directors granted everything the businessman demanded.
Following McCormick’s original ruling, Musk announced that he would move Tesla’s registration from Delaware to Texas, where the automaker is now headquartered and where corporate governance laws are less stringent. In June, Tesla brought Musk’s compensation package and the move of registration to Texas to a vote at the company’s shareholder meeting. Both proposals were accepted by the shareholders despite the rejection of large institutional investors to pay tens of billions of dollars to the businessman.
