By Tom Hals
WILMINGTON, Delaware (Reuters) – Tesla can’t give Elon Musk a $56 billion compensation package deal regardless of a vote in assist of the CEO’s pay deal by the corporate’s shareholders, a Delaware decide dominated on Monday.
Beneath is a take a look at what might come subsequent for Tesla and its billionaire founder, who remains to be in search of an enormous payday from the corporate:
WHAT DOES MUSK WANT?
Musk advised a particular committee of the Tesla board quickly after a decide voided his compensation in January that he needed a similar-sized substitute package deal, in keeping with a securities submitting.
As well as, earlier this yr he stated on his social media platform X that he needed a bigger stake in Tesla or he may develop some merchandise exterior the corporate. Musk’s different firms embrace rocket enterprise SpaceX and Neuralink, which develops mind implants.
TESLA COULD APPEAL THE RULING
Musk and Tesla’s board might enchantment and attempt to reverse the ruling on the Delaware Supreme Courtroom, a course of that sometimes takes round a yr.
The case, which concerned the largest-ever pay deal at a U.S. public firm, raises points which have hardly ever been addressed by Delaware judges, including uncertainty to an enchantment.
For instance, the trial courtroom decide, Chancellor Kathaleen McCormick, discovered that Musk managed the compensation negotiations, despite the fact that he owned solely about 22% of Tesla’s inventory.
As well as, Tesla has acknowledged that the June vote by shareholders to ratify Musk’s pay was a “novel” authorized tactic and has stated it was unclear how it might be handled beneath Delaware regulation.
TESLA COULD DEVISE A NEW PLAN
Tesla’s board might craft a brand new pay package deal, though that could possibly be very costly.
The unique plan, agreed to by Musk and the corporate in 2018, awarded him inventory choices if the corporate hit very aggressive efficiency and monetary targets. The inventory choices allowed Musk to purchase Tesla inventory priced on the 2018 stage. The corporate exceeded the targets, and Tesla’s inventory has risen 10-fold since then, making the choices extremely helpful.
Tesla booked a value of $2.6 billion when the 2018 plan went into impact. The corporate has stated {that a} substitute plan for a similar value right now would probably need to be lower than 10% of the scale of the 2018 plan.
COULD TESLA JUST RESTORE THE OLD PLAN?
Tesla might provide Musk the identical 304 million inventory choices with the identical $23.34 train worth used within the 2018 plan. If shareholders needed to problem that, they must sue in Texas, the place the corporate reincorporated this yr, quite than the Courtroom of Chancery in Delaware.
