©Reuters. File photo: Tesla and SpaceX CEO Elon Musk pauses during a talk event with British Prime Minister Rishi Sunak on Thursday, November 2, 2023 in London, England.Kirsty Wigglesworth/Pool, Reuters
(Reuters) – A Delaware judge on Tuesday threw out Elon Musk's record $56 billion Tesla (NASDAQ:) compensation package, saying the compensation approved by the EV maker's board was “incalculable.” He argued that the amount was unfair to shareholders.
Here are some reactions to this ruling:
“We're excited to see this happen,” said Kristin Hull, founder of Near Impact Capital, which owns Tesla stock.
The court's decision “speaks clearly to the fact that the power of shareholder involvement on boards is not doing its job. We have seen boards beholden to shareholders. This is a brotherhood show.”
“This company and this particular CEO think they are above the law in many ways.”
Adam Badawi, Professor of Law, University of California, Berkeley:
“If this ruling stands, his net worth will take a significant hit.
“I think what the court is essentially saying is, 'Look, we're not literally taking money out of Elon Musk's pocket,' although we're not exercising the stock. He certainly feels that way. So the board can start over and give him a new subsidy with a better process and in a way that the amount is justified by what's important to Tesla's shareholders. You will be able to do it.”
said Ross Gerber, president and CEO of Gerber Kawasaki Wealth & Investment Management.
“The current board cannot negotiate new compensation for Mr. Musk because it has already been determined to be non-independent. We need an independent board, and to actually find one “We're going to have to wipe out three or four directors.” “Independent people can negotiate this salary contract, otherwise the contract is void. So essentially, Tesla's corporate structure The whole thing was deemed inappropriate for a public company.”
John Coffee, Professor at Columbia Law School:
“He might appeal because he has little to lose by appealing. I don't expect the (Delaware Supreme Court) to overturn him, but it certainly could happen. The 'revamp' doesn't have to be all that dramatic; all you need is one or two clearly independent directors.”
