Delaware Judge Rejects Elon Musk’s $55.8 Billion Tesla Pay Package

A Delaware judge has once again ruled against Elon Musk’s record-breaking $55.8 billion Tesla compensation package, a decision that could strip billions from the world’s wealthiest individual. On Monday, Kathaleen St. Jude McCormick, the Delaware Chancery Court judge, determined that Musk exerted undue influence over Tesla’s board when it approved the package in 2018.

McCormick had previously described the compensation plan as excessive and declined to reconsider her stance in January, despite strong shareholder support and Musk’s appeals for a review. Her latest ruling threatens to invalidate what is regarded as the largest compensation plan ever awarded to a U.S. business leader, potentially diminishing a substantial part of Musk’s fortune.

In her 101-page opinion, McCormick—informally known as Judge Katie—cited both Shakespeare and Star Trek to illustrate her points. She observed that while Tesla’s board could have opted for a more reasonable compensation plan, they instead conceded to Musk’s demands. She noted her willingness to explore new legal territory in assessing Musk’s control over Tesla, referencing Star Trek with the phrase “boldly go where no man has gone before.” Additionally, she invoked Shakespeare’s Henry V, remarking, “Once more unto the breach, dear friends, once more.”

Musk’s net worth recently reached an all-time high, fueled by a surge in Tesla’s stock value following the U.S. election and increased investment in his artificial intelligence ventures. This milestone surpassed his previous record of $340.4 billion in November 2021.

If McCormick’s decision stands, Tesla’s board will need to design an alternative compensation plan. However, the board has already announced plans to appeal the ruling to the Delaware Supreme Court, a process expected to take several months. Unlike the U.S. Supreme Court, which has discretion over the cases it hears, the Delaware Supreme Court is obligated to review appeals from lower courts.

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