Tesla Inc TSLA CEO Elon Musk sees his mammoth $56 billion remuneration package dismissed following a recent court ruling in Delaware. This forces Musk and his team to renegotiate his contract under the heightened scrutiny of investors.
What Happened: Although Musk’s subsequent moves are still uncertain, an appeal will probably be made against the court ruling in the Delaware Supreme Court. If this ruling remains upheld, Musk will be obliged to return what he received as part of the 2018 contract- twelve tranches of options currently worth around $51 billion, Reuters reported. The options stand unexercised as of now.
Ross Gerber, a Tesla shareholder, told Reuters that the court’s decision necessitates the appointment of fresh independent board members to oversee Musk. This could be a critical juncture for Musk, who has previously conveyed his unease about the prospect of moving Tesla toward becoming an AI leader without increased control of the company.
However, the CEO might not quit given that his exit will drop Tesla’s share value and subsequently the value of the 13% stake he holds in the company, the report added, citing the director of the University of Delaware’s corporate governance Center Charles Elson.
“I mean, he may not like it, but it’s going to be very hard to run this company as it did,” Elson said.
However, deciding a new package for the CEO will also be difficult as the judge on Tuesday termed the 2018 package an “unfathomable sum.”
Why It Matters: Meanwhile, Musk on Tuesday held a poll on whether Tesla must be incorporated into Texas after souring on Delaware. The company is currently incorporated in Delaware and headquartered in Texas.
The final results of the poll show a whopping majority tending towards incorporating the EV giant into Texas. Whether Musk will act upon the poll, like he has several times before, is yet to be confirmed.
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