(RTTNews) - Tesla Inc. Chief Executive Officer Elon Musk's $56 billion pay package, which was approved by its shareholders, has been rejected by a Judge for the second time, noting that the compensation plan was improperly granted. Meanwhile, Tesla said the court's decision is wrong, and that the electric vehicle maker is going to appeal.
Delaware judge Chancellor Kathaleen McCormick, who voided the 2018 pay package in January this year calling it deeply flawed, now has upheld it.
Responding to the ruling, Tesla said in a post on X, "A Delaware judge just overruled a supermajority of shareholders who own Tesla and who voted twice to pay @elonmusk what he's worth. The court's decision is wrong, and we're going to appeal. This ruling, if not overturned, means that judges and plaintiffs' lawyers run Delaware companies rather than their rightful owners - the shareholders."
In a separate X post, Musk called the ruling absolute corruption.
"Shareholders should control company votes, not judges," he noted.
The pay package in stock, which was worth around $56 billion at the time of the January ruling, is now worth around $101.5 billion as of Monday's closing, with the significant growth in Tesla's share value.
Musk's Tesla compensation package, which is considered the largest in U.S. corporate history, was initially approved by the shareholders in 2018. However, it faced severe scrutiny and was voided by McCormick, who stated that the package was approved due to Musk's substantial relation with the Tesla Board.
Tesla shareholders were divided over the proposed pay package as some considered Musk is integral to Tesla's future success, while certain others said the compensation is too excessive and detrimental to the company's best interests.
However, around 77% shareholders, at Tesla's annual meeting in June, again approved the ratification of the 2018 CEO Performance Award. Based on this result, the company challenged the judge's previous ruling.
McCormick now noted that even if a stockholder vote could have a ratifying effect, it could not do so here. "Were the court to condone the practice of allowing defeated parties to create new facts for the purpose of revising judgments, lawsuits would become interminable," the judge wrote.
Following the January ruling by the Delaware judge, Musk had put forward the resolution to move its state of incorporation to Texas from Delaware after a significantly positive response from his followers in X.
In the June meeting, the luxury electric car maker's shareholders also approved the resolution, and the company is now incorporated in Texas, the base of its largest U.S. factory. Musk has also moved the state of incorporation of SpaceX to Texas from Delaware.
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