Elon Musk and Tesla negotiated an extensive salary package in 2018, which has now come about under obscure conditions.
A judge in the US state of Delaware ruled that Musk had too much influence on the agreement of the stock allocation plan, which means that a fair process cannot be spoken of. The plaintiff, who wants to cancel the agreement, has now been proven right.
How things will proceed remains open for now, but the judge instructed the plaintiff and Tesla to work out a solution. She also emphasized that the cancellation of the megadeal does not automatically result from the verdict, but the plaintiff is entitled to it. Musk and Tesla can still appeal.
The 2018 plan stipulated that Musk would receive stock options worth up to $55.8 billion (€51.46 billion) in twelve steps, provided Tesla’s market value and business figures reach certain minimum values.
The translation of the headline into English is:
"However, the judge decided that the shareholders were not sufficiently informed about the process in which the giant package was negotiated. Musk had close relationships with some individuals involved in the negotiations on Tesla's side."
The Judgment Comes at a Delicate Time for Tesla. Last week, the electric car pioneer disappointed analysts and investors with weaker growth figures and a scrapped outlook. In addition, another compensation conflict looms that Musk had triggered.
Mid-January, the Tesla chief surprised investors with a kind of ultimatum: via tweet, he threatened to build future AI and robotics products outside of Tesla unless he controlled around a quarter of the voting rights. Currently, Musk is the largest shareholder with 13 percent of the shares and could increase this stake to just under 21 percent if he exercises his stock options.
However, this would be associated with high costs.
According to Musk's plan, the board of directors should allocate the shares to him as part of a new compensation package. The decision in Delaware, that the package already negotiated in 2018 is now also up for debate, is likely to make the struggle over Musk's future compensation even more difficult and unsettle Wall Street.
The Tesla stock fell by just under three percent after-hours. Musk himself has not yet commented on whether he will appeal, but he advised against setting up a company in Delaware on his online platform X, since many US corporations are based there due to favorable tax regulations.
