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Tesla CEO Elon Musk's $55.8 billion pay package was unfair to the electric carmaker's shareholders and must be rescinded, Delaware Court of Chancery Judge Kathaleen McCormick ruled yesterday. Most of the board members were beholden to Musk or had compromising conflicts, she wrote.
"Swept up by the rhetoric of 'all upside,' or perhaps starry-eyed by Musk's superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?" McCormick's ruling said.
The post-trial ruling found in favor of lead plaintiff and shareholder Richard Tornetta, concluding "that the compensation plan is subject to review under the entire fairness standard, the defendants bore the burden of proving that the compensation plan was fair, and they failed to meet their burden."
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