Washington, Jan 30 (EFE). – Elon Musk lost more than $56 billion after a US court ruled Tuesday that Tesla’s board of directors failed to prove that the compensation it granted him in 2018 was “fair.”
Delaware Judge Kathaleen McCormick agreed with the plaintiff in the case, Richard Tornetta, that Musk controlled Tesla’s board when it granted him a package of stock options in the car company in 2018.
Following McCormick’s decision, Musk responded on his social media platform X.
“Never incorporate your company in the state of Delaware,” Musk said.
Following the decision, Tesla shares fell 3% after the close.
The stock option package granted to Musk, which was contingent on Tesla reaching 12 goals, including a market capitalization of at least $50 billion and certain revenue targets, allowed him to become the world’s richest man.
According to the agreement, Musk could buy 1% of the manufacturer’s shares at a bargain price every time the company reached one of the established goals.
During the 2022 trial, Tornetta, who was a Tesla investor, claimed that the compensation agreed to between Musk and the company was exorbitant and only possible because the businessman controlled the board.
Musk said he had no role in the deal, in which Tesla compensated him with tens of millions of shares.
However, McCormick noted in her ruling that Musk maintained deep personal relationships with the people who had to decide the amount of compensation.
The judge also said in her decision that Tornetta had proven that Musk “controlled Tesla” and that the process leading to the board’s approval of his compensation was “deeply flawed.”
For example, the judge noted that the head of Tesla’s legal department who participated in the process, Todd Maron, was the lawyer who represented Musk in his divorce.
Moreover, the negotiation granted everything that Musk demanded, but the judge noted that the businessman would not have left Tesla if he had not received the gigantic package of stock options.
For this reason, McCormick said that Musk directed the process and that an “unfair price” was reached, which is why she ruled that the agreement between the company and the businessman is void.
Musk currently controls 13% of Tesla shares and is the company’s largest individual shareholder.
On Thursday, Musk said during a conference call with analysts that he believes he should own 25% of Tesla to be able to lead the manufacturer and that the board should offer him more stock options to reach that figure. EFE