Elon Musk Challenges Judge's Decision, Seeks Reinstatement Of Record $56 Billion Tesla Payout

In a bid to regain his $56 billion compensation, Elon Musk filed an appeal challenging a lower court’s decision to overturn the record payout from Tesla Inc. TSLA. Musk on Tuesday contended that the judge committed several legal errors in the ruling.

What Happened: Musk’s appeal asserts that his 2018 pay package, which shareholders approved twice, significantly contributed to Tesla’s growth. However, the Court of Chancery deemed it unfair to shareholders, Reuters reported.

The appeal brief, submitted by Musk along with the current and former Tesla directors listed as defendants in the case, contends that the court’s ruling “defies settled principles of Delaware law, sound corporate governance, and common sense.”

Tesla did not immediately respond to Benzinga’s request for comment.

In January 2024, Chancellor Kathaleen McCormick revoked Musk’s stock options pay package, calling it “unfathomable.” She contended that the decision was unfair to Tesla shareholders, as the directors who approved it were influenced by Musk, and Tesla failed to disclose essential information to investors before they cast their votes.

Musk’s compensation package granted him the option to purchase approximately 303 million Tesla shares at about $23 each, provided the company met specific performance and valuation targets.

Why It Matters: This appeal comes after Musk’s vocal criticism of Delaware’s legal system. Following the rejection of his nearly $100 billion compensation package from Tesla, Musk did not hold back in expressing his dissatisfaction with the state’s Court of Chancery, which he described as “absolute corrupt”. The appeal is essential for reinstating Musk’s compensation and ensuring his continued commitment to Tesla. Musk has suggested that he desires a larger stake in the company; otherwise, he may pursue product development outside of Tesla.

Notably, Meta Platforms META, TripAdvisor TRIP, and Trump Media & Technology Group Corp DJT are also considering moving out of Delaware to re-incorporate in places like Nevada and Florida. As a result, the state is looking to revise its policies for handling shareholder lawsuits.