A US judge has upheld a decision to deny Tesla CEO Elon Musk a multi-billion dollar pay package despite shareholders voting to reinstate the compensation deal. Judge Kathaleen St Jude McCormick reaffirmed the earlier ruling that voided the pay deal, stating that Tesla’s board was too close to Musk and did not protect shareholders’ interests. She found that there was no legal precedent to reverse her ruling and criticized the defense’s arguments as unprecedented. Tesla shares dropped 1.4 percent in after-hours trading following the decision.
The judge also rejected a request for $5bn in fees by the plaintiff’s lawyers, instead granting $345m. Musk described the ruling as wrong and said that shareholders should control company votes, not judges. Under the 2018 pay deal, Musk agreed to be paid in Tesla stock options based on company goals, leading to his substantial wealth increase. The compensation package was initially worth $56bn and is now valued at over $101bn due to Tesla’s stock price surge.
Tesla stated that it would appeal the decision, claiming that judges and plaintiffs’ lawyers should not control Delaware companies. Musk criticized Judge McCormick as an activist posing as a judge. Despite overwhelming shareholder support to reinstate the package, the court’s decision blocked it earlier this year. Tesla shareholders voted to restore Musk’s pay deal in June.
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