Elon Musk's $56 billion pay package will likely see overwhelming approval, putting a big overhang for the stock behind it, Wedbush Securities' Dan Ives says
Business Insider
Musk's $56B Tesla Pay Deal Rejected for Second Time
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Above: Tesla Chief Executive Officer Elon Musk arrives for Israeli Prime Minister Benjamin Netanyahu's speech to a joint meeting of Congress at the US Capitol on July 24, 2024, in Washington, DC. Image copyright: SAUL LOEB/Contributor/AFP via Getty Images
The Facts
Delaware Chancery Court Judge Kathaleen St Jude McCormick has declined, for the second time, to reinstate Tesla Chief Executive Officer Elon Musk's record $56B salary award.
Following shareholder and director acceptance of the salary award in June, Tesla stated that the most recent decision was "wrong" and that shareholders are the rightful owners of Delaware companies — not judges and plaintiffs' lawyers. Monday's decision follows months of legal wrangling.
After Musk requested that Delaware Chancery Court Judge McCormick reconsider her original decision, the judge concluded on Monday that the pay package was excessive and that Musk had inappropriately held influence over Tesla's board when it accepted his proposal in 2018.
The Spin
Narrative A
It is time for Tesla to respect its deal with its Chief Executive and pay what it owes. Musk deserves to be compensated for achieving Tesla's financial benchmarks and advancing the company into global prominence in the electric vehicle sector.
Narrative B
Musk's pay is excessive and not in the interest of the company or its shareholders. Musk's proposed package actually results in Tesla shareholdings resembling more of a meme stock. The company must focus more on quality and improving business processes.
