Elon Musk complains on X (formerly Twitter), ``Don't establish a company in Delaware,'' because Tesla's over 8 trillion yen remuneration was invalidated as too high.


by

Daniel Oberhaus

A court in the U.S. state of Delaware invalidates the remuneration package that Elon Musk was scheduled to receive as Tesla's CEO, amounting to a total of $56 billion (approximately 8.2 trillion yen), stating that the remuneration was ``too high.'' It was decided that. In response, Mr. Musk complained on X (formerly Twitter), ``Never establish a company in Delaware.''

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https://www.axios.com/2024/01/30/elon-musk-pay-package-tesla-judge-voids

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Tesla announced in 2018 that it would give Musk a total compensation package of $56 billion if he served as CEO or chairman and chief product officer for the next 10 years and if Tesla's market capitalization met criteria. did. In response, Tesla shareholder Richard Tornetta filed a lawsuit against Musk and Tesla claiming that the compensation package was too high and the board breached its fiduciary duties. A lawsuit was filed seeking annulment.

On January 30, 2024, Judge Catherine McCormick of the Delaware Court of Chancery , who oversaw the case, issued a ruling invalidating the $56 billion compensation package. McCormick points out that Tesla's board failed to justify the compensation package and showed no evidence that it had sufficiently negotiated with Musk.

McCormick ruled that the plaintiff, Tornetta, proved that 'Mr. Musk controlled Tesla' and that the process by which the board of directors approved Mr. Musk's compensation was seriously flawed. . Mr. Mask had connections with members of the board of directors and people who negotiated compensation packages, including people who felt beholden to Mr. Mask.

In his ruling, McCormick wrote, ``The board's attitude in the process that led to the award of the compensation package makes it clear that Mr. Musk was dominant in the transaction.Simply put, the compensation committee also The Compensation Committee also did not act in the best interest of the company when negotiating Mr. Musk's compensation package.In fact, there is little evidence that any negotiations took place. We did not engage in unfavorable negotiations, but rather worked together as an advisory body to Mr. Musk.'



'We are very grateful for the court's thorough and highly reasoned decision to rescind the ridiculously high compensation package that Tesla's board granted to Mr. Musk,' Tornetta's attorney, Greg Vararo, said in a statement. 'The court's hard work will go directly to Tesla investors, who will see the dilution of their huge compensation packages offset.'

At the time of writing the article, Mr. Musk is the world's richest person, but if he is asked to return his compensation package, his assets will decrease and he may fall to third place in the world. If Mr. Mask feels dissatisfied with this judgment, he can appeal to the Delaware Supreme Court.

This lawsuit was filed in Delaware because Tesla is registered as a corporation there. Delaware is the second smallest state in the United States, but it has enacted corporate laws that give preferential treatment to corporations, such as corporate tax, and famous large companies such as Google's parent company Alphabet, Apple, and Amazon have registered their corporations there. It is also the state where

Why do famous companies such as Apple and Google choose 'Delaware'? -GIGAZINE



In response to this ruling, Mr. Mask complained on X (formerly Twitter), ``Please never establish a company in Delaware.''



Mr. Musk also conducted a survey asking, ``Should Tesla move its state of incorporation to Texas, where its physical headquarters are located?'' At the time of article creation, more than 1.1 million votes were cast, and more than 85% answered 'Yes' (should be relocated).



Texas Governor Greg Abbott cited the survey and said, 'It's over, Elon. The Office of Elections declares a landslide victory in Texas.' However, Felix Salmon of overseas media Axios points out that it is highly unlikely that Tesla will actually reincorporate in Texas.



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