October 16th Report – The trial for Tesla CEO Elon Musk’s “sky-high” compensation resumed on October 15 in Dover, Delaware. Defendants, including Tesla, the Tesla Board, and Musk’s representatives, are requesting the Delaware Supreme Court to overturn a lower court ruling and reinstate Musk’s $56 billion compensation plan.
In 2018, the Tesla Board and shareholders approved Musk’s compensation plan, which was valued at approximately $56 billion at the time. The plan set 12 performance targets, and Musk could earn corresponding stock options as each goal was met. As the plaintiff, Tesla shareholder Richard Tornetta believes the board failed to perform its duties, leading to Musk inappropriately influencing the approval of his compensation, which resulted in his “unjust enrichment.”
In January 2024, Delaware Chancery Court Chief Judge Kathryn McCormick ruled that the compensation plan was invalid. Tesla shareholders then voted again in June 2024 to approve the plan. The defendants later filed a motion to ask McCormick to recognize the shareholders’ decision. On December 2, 2024, McCormick upheld her earlier ruling.
Defendant attorney Jeffrey Wall argued in court on October 15 that Tesla shareholders voted with full knowledge and understanding of Musk’s compensation plan, stating, “Acknowledging this fact should resolve the case.”
According to Reuters, several current and former Tesla board members, as defendants, denied any wrongdoing and claimed McCormick misunderstood both the facts and the law. Musk did not attend the trial.
As reported by Reuters, due to McCormick’s previous ruling and other factors, several large companies, including Tesla, Dropbox, and Andreessen Horowitz, chose to relocate their headquarters to Texas or Nevada, where courts are considered “more favorable to directors.”
If the defendants fail in their appeal to the Delaware Supreme Court, according to an alternative plan approved by Tesla in August 2024, Musk would still be able to acquire billions of dollars’ worth of shares. Additionally, on September 5, 2024, Tesla announced a 10-year compensation plan for Musk. If he meets all the targets, he could earn Tesla stock valued at approximately $1 trillion.
Musk also owns companies such as xAI, SpaceX, and Neuralink. According to Forbes, on October 2, Musk became the first person in the world to reach a net worth of $500 billion. If his wealth continues to grow at the current rate, Musk is projected to become the world’s first trillionaire by March 2033.
