Delaware court order recovers $55.8 billion in cash from Tesla
The entrepreneur polled via X whether Tesla will be taken out of Delaware
In his first reaction after a Delaware judge decided to invalidate Tesla's CEO pay agreement, the billionaire wrote in a post on X (formerly Twitter): “Never incorporate your company in Delaware.” However, shortly after that, he made a second post indicating that he was considering moving Tesla out of the state.
That's at least according to a poll it posted asking users to vote on whether the electric car company should change its state of incorporation, choosing Texas, where it's headquartered.
The backlash comes after Judge Kathleen McCormick on Tuesday invalidated Tesla CEO's $55.8 billion pay deal as “deeply problematic,” vindicating company shareholder Richard Tornetta who appealed five years ago, citing overpayment.
At the week-long trial, executives said the deal was struck to ensure one of the world's most powerful businessmen could remain focused on the company.
A Delaware judge said Musk controlled the board through his personality and influence, even with only a 22% stake in Tesla, and the board could not prove that the shares were awarded at a fair price and through a fair process.
Richard Tornetta's legal team argued that the board had a duty to offer a smaller salary package or find another CEO, and that they should have asked Musk to work full-time at Tesla instead of letting him focus on other projects.
As Bloomberg reported, yesterday's ruling, which amounts to its first major defeat in court, means that five years after Elon Musk received the largest executive pay in history, Tesla's board will have to start over and come up with a new ruling.
The decision, which Tesla can appeal, threatens Musk's title as the richest man in the world.
It is worth noting that Musk is seeking more control over the company. In fact, earlier this month he threatened to boycott the development of advanced robotics and AI technologies if his desire to increase his influence in the company by getting about 25% of the vote, nearly double what he has now, is not accepted.
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