A judge in Delaware upheld the state’s decision to seize the wealth amassed by Elon Musk through Tesla, blocking him from receiving a compensation package now valued at over $100 billion. Musk’s resistance to woke politics, his efforts to make X a neutral platform, and his support for Donald Trump’s presidential campaign have cost him dearly.
On Monday, Delaware Chancellor Judge Kathaleen McCormick affirmed her earlier ruling from January, which determined that Musk was not entitled to a 2018 compensation package worth $56 billion at the time. McCormick had previously criticized the package as “the biggest compensation plan ever — an unfathomable sum.”
After McCormick initially ruled that Musk failed to obtain proper approval from Tesla’s shareholders, he filed a lawsuit. Musk argued that he had received approval from the board and had met the necessary financial targets, which included goals based on stock value, revenue, and profitability.
Musk had once propelled Tesla’s value to nearly a trillion dollars during the period when the compensation plan was in place. Today, the company is worth over $1.1 trillion. Following McCormick’s ruling in January 2024, Tesla sought approval for the compensation package from its shareholders. In June, shareholders overwhelmingly endorsed the original $56 billion plan, with 77% supporting Musk.
After the shareholder approval, Tesla once again turned to the Delaware court to seek validation for the compensation plan, only to be rejected once more. In her opinion, McCormick stated, “Even if a stockholder vote could have a ratifying effect, it could not do so here.” She further wrote, “Were the court to condone the practice of allowing defeated parties to create new facts for the purpose of revising judgments, lawsuits would become interminable.”
While McCormick penalized Musk for the wealth he built, she allowed the lawyers who sued him on behalf of shareholders to collect an extraordinary $345 million in attorney fees for their work.
Musk expressed his discontent with the ruling on X, stating, “Shareholders should control company votes, not judges.” He also shared other posts critical of the decision. One repost read, “Things to do in Delaware: 1) Leave.” Musk also highlighted a post from fund manager Cathie Wood, who described McCormick as an “activist judge at its worst.” Wood continued, “No judge has the right to determine CEO compensation. Shareholders voted twice, overwhelming each time, to ratify @elonmusk’s 2018 performance-based pay package.”
Since the initial ruling, Musk has intensified his opposition to Delaware. This year, he moved the incorporation of both Tesla and SpaceX from Delaware to Texas, while shifting Neuralink to Nevada. Musk has also called on other companies to follow suit and leave Delaware.
On X, Musk bluntly advised, “Never incorporate your company in the state of Delaware.” Delaware, the home state of President Joe Biden, has faced criticism for its close ties to the Biden family and its political influence. In an article published last year, The Wall Street Journal, co-authored by former Attorney General William Barr, criticized Delaware for promoting far-left Environmental, Social, and Governance policies and attempting to impose them on corporations. Additionally, The Hill reported that many major corporations are leaving Delaware due to its highly politicized environment.
Recent data shows a decline in new incorporations in Delaware, with a 6% drop reported in 2022, the most recent year for which the state has released figures.
{Matzav.com}