Elon Musk listens to a speech by U.S. President-elect Donald Trump during the House Republican Conference at the Hyatt Regency on Capitol Hill in Washington, DC, on November 13, 2024.
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tesla CEO Elon Musk lost his bid to reinstate his 2018 CEO compensation package on Monday after a Delaware judge upheld an earlier ruling that the compensation plan was improperly granted.
The package was worth about $56 billion, making it the largest compensation plan for a public company executive in U.S. history. Tesla said in a post on Musk’s social media platform X that it plans to appeal the ruling. In another X post, Musk called the ruling “absolute corruption.”
In January, Finance Minister Kathleen McCormick invalidated the pay plan, ruling that Musk personally “controlled Tesla” and dictated compensation terms to the board, which did not negotiate fairly. She said the process leading to approval of that pay plan was “deeply flawed.”
In response to this comment, Tesla held a shareholder vote at its annual meeting in Austin, Texas in June, asking investors to “approve” Musk’s 2018 CEO compensation plan. Musk’s lawyers relied on that vote to try to persuade the judge to overturn Musk’s opinion after the trial.
“Even if a shareholder vote had a ratifying effect, it cannot do so here,” McCormick wrote in an opinion Monday. “If courts accept the practice of allowing losing parties to create new facts for the purpose of modifying judgments, litigation will continue indefinitely.”
As part of Monday’s opinion, Mr. McCormick approved awarding $345 million in legal fees to lawyers who successfully sued on behalf of Tesla shareholders to invalidate Mr. Musk’s pay plan.
Attorneys at Bernstein, Litowitz, Berger & Grossman said they were “pleased with Chancellor McCormick’s decision to reject Tesla’s invitation to introduce continued uncertainty into the court process, and are pleased with Chancellor McCormick’s decision to reject Tesla’s invitation to introduce continued uncertainty into the court process, and are pleased with Chancellor McCormick’s decision to reject Tesla’s invitation to introduce continued uncertainty into the court process. I would like to thank our staff for their extraordinary efforts.” The firm representing the plaintiffs said in a statement.
Following the January ruling, Musk slammed the Delaware court, writing on X that he should “never incorporate a company in Delaware.” Tesla subsequently held a shareholder vote to reincorporate in Texas, officially transferring its incorporated status to Texas.
Musk also moved defense contractor SpaceX’s state of incorporation from Delaware to Texas.
Despite his legal setbacks, Musk’s net worth has risen significantly in recent weeks. Excluding all options included in his pay package, Musk has become more than $43 billion richer since Donald Trump won the November election. Tesla shares rose 42% in the four weeks after the election on optimism that Musk’s closeness with the president-elect would lead to favorable policies for the company.
Musk’s remaining Tesla stock is worth nearly $150 billion based on Monday’s closing price. That alone, excluding SpaceX stock, would put him among the world’s richest people. Equilar estimates that at current stock prices, Musk’s 2018 package would have been worth $101.4 billion.
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