Denied! Elon Musk’s $85 billion Tesla ‘bonus’ cancelled by judge - SUV VEHICLE

Denied! Elon Musk’s $85 billion Tesla ‘bonus’ cancelled by judge


Tesla CEO Elon Musk will miss out on a staggering compensation package that was deemed ‘unfair’ by a Delaware State judge.

Performance-based incentives or bonuses are nothing new in the corporate world. Many workers and leaders worldwide are rewarded for meeting a KPI (Key Performance Indicator) or achieving a particular goal.

However, a compensation package defined in 2018, that would see Tesla CEO scoring an enormous $US56 billion ($AU85 billion) has just been voided by a judge in the US state of Delaware, describing it as being “inappropriately set” by Tesla’s board.

For context, this would be enough to purchase every single one of the 1.2 million Tesla Model Y electric SUVs sold globally in 2023, or you could just buy all of General Motors and still have a few billion left to play with.

The pay packet, which has been reported as the largest ever in corporate history, would see Musk receive 12 tranches of Tesla stock options if the electric vehicle manufacturer’s market capitalisation rose by $50 million ($AU76 million) and the company met a revenue target.

As CEO, Musk hit his targets. The US-based company had a market capitalisation of $US59.8 billion in January 2018, which has risen to $US610.2 billion this year – an increase of $US550.4 billion ($AU837.9 billion), or 920.4 per cent.

But a lawsuit filed by a Tesla shareholder claimed that even though the company had experienced significant growth, by enabling Musk’s compensation package, the Tesla board “breached their fiduciary duties by awarding Elon Musk a performance-based equity-compensation plan”.

The judge agreed, finding that Musk ‘controlled’ Tesla and the board’s approval of the multi-billion dollar package followed a process that was “deeply flawed”.

In the ruling, the judge noted that Musk “enjoyed thick ties with the directors tasked with negotiating on behalf of Tesla, and dominated the process that led to board approval of his compensation plan”, and that Musk and his lawyers “were unable to prove that the stockholder vote was fully informed because the proxy statement inaccurately described key directors as independent and misleadingly omitted details about the process.”

Musk does not draw a salary from Tesla.

The news saw Tesla stock prices drop approximately 3 per cent, on top of the near 23 per cent decline the brand’s shares have seen so far this year.

That said, Tesla shares ($US191/$AU291) are still 830 per cent higher than they were just four years ago ($US20/$AU31).

MORE:Search Used Tesla Cars for Sale
MORE:Search Used Tesla Cars for Sale
James Ward

With over 20 years of experience in digital publishing, James Ward has worked within the automotive landscape since 2007 and brings experience from the publishing, manufacturer and lifestyle side of the industry together to spearhead Drive’s multi-media content direction.

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