Elon Musk had put together a multi-billion dollar compensation deal with Tesla, but a Delaware judge has voided it. Here’s the reason as to why.
In 2018, Tesla extended an unprecedented compensation deal to its CEO Elon Musk. He would work without drawing a salary for the next 10 years, help achieve a dozen targets, and scale the company’s market valuation past the $650 billion mark. If he meets all the goals, he will go home with a paycheck close to $55 billion. Today, a court in Delaware has ruled that Musk can’t be awarded the obscenely generous multi-billion dollar compensation after a shareholder brought a legal case against the whole idea.
Musk’s team argued that the compensation was “fair because its milestones were ambitious and difficult to achieve.” However, they also admitted that at least three of the targets were in line with the company’s own internal growth projections (some of them as high as 70%). At the same time, the company routinely missed internal projections. However, the main argument was that either the compensation grant was solely Musk’s proposal or he failed to disclose his close relations with multiple board members over whom the Tesla chief exercised maximum personal influence.
