Delaware judge reaffirms overturning Elon Musk's $56 billion pay package at Tesla

Elon Musk faced a legal setback Monday when a Delaware judge upheld her earlier ruling that the pay package awarded to Tesla's chief executive in 2018 must be blocked, despite the backing of the electric vehicle company's shareholders in a vote to reinstate it. The plan, valued at approximately $56 billion, marked a milestone as the largest pay package in U.S. history for a public company executive.

Judge Kathaleen St. J. McCormick, of the Delaware Court of Chancery, upheld her January decision, in which she concluded that Tesla shareholders were not adequately informed about the details of the deal and that the company's board members were not sufficiently independent to approve it.

Despite this decision, attorneys for Tesla and Musk argued that a second shareholder vote, held in June in Austin, Texas, to "ratify" the package, should have been sufficient to restore it. However, McCormick rejected this argument, noting that the shareholder vote could not have retroactive effect on the original approval, given the lack of transparency in the initial process and concerns about board independence.

Indemnification and legal costs

The judge also approved an indemnification of $345 million in legal fees to the firm Bernstein, Litowitz, Berger & Grossmann, which represented shareholders who challenged the pay package.

Possibility of appeal to Delaware Supreme Court

Tesla and Musk have the possibility of appealing the decision to the Delaware Supreme Court. Musk had already publicly expressed his displeasure with the legal process, calling the Delaware court in January a stumbling block for the company and suggesting that Tesla should relocate its incorporation to another state.

The impact on Musk's fortunes

The court setback has not affected Musk's net worth significantly. In fact, in recent weeks, his wealth has experienced a notable increase. Excluding salary package options, his fortune has increased by more than $43 billion since Donald Trump's election victory last month. Tesla shares, which Musk still owns heavily, have risen 42% since the election, boosting his personal fortune to more than $150 billion, cementing him among the richest people in the world.