Friday, March 1, 2024

A US court has annulled the $56 billion payment Tesla made to Elon Musk

Elon Musk lost more than 56 billion dollars (about 51,642 million euros) after a US court ruled on Tuesday that the excessive remuneration given to the Tesla board of directors in 2018 was excessive.

Delaware Judge Kathaleen McCormick agreed with the plaintiff in the case, Richard Tornetta, considering that Musk controlled Tesla’s board of directors when he granted him a package of stock options in the car company in 2018.

Tesla shares fell

Meanwhile, Tesla shares fell 3% after the markets closed.

The stock option package, conditioned on Tesla meeting 12 goals, including a market capitalization of at least $50 billion and certain revenue targets, allowed Musk to become the richest man in the world.

According to the agreement reached by Musk and Tesla, the entrepreneur can buy 1% of the factory’s shares at a bargain price every time the company reaches one of the established goals.

Overpaid, as one investor said

During the trial in 2022, Tornetta, who is an investor in Tesla, said that the compensation agreed between Musk and the company was excessive and only fulfilled because the entrepreneur controls the board of directors.

For his part, Musk stated that he had no role in the deal where Tesla paid him ten million shares of the company.

McCormick noted in his decision released Tuesday that, in fact, Musk maintains deep personal relationships with the people who must decide the amount of compensation. For example, the judge noted that the director of the legal department of Tesla, and who participated in the process, Todd Maron, was the lawyer who represented him in his divorce.

In addition, the negotiations granted all Musk’s demands, although the judge considered that the businessman would not leave Tesla if he did not get the large package of stock options. For this reason, McCormick pointed out that Musk directed the process and that an “unfair price” was reached, so he ruled that the agreement between the company and the businessman was null and void.

Musk currently controls 13% of Tesla shares and is the company’s largest individual owner. However, on Thursday, Musk stated in a conference call with analysts that he believes he needs to own 25% of Tesla to lead the manufacturer and that the board of directors should give him more options. in stock to reach that number.

World Nation News Desk
World Nation News Desk
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