On December 2nd local time, Judge Katherine St. John McCormick of the Delaware District Court decided to uphold her ruling from January this year, stating that Tesla's board of directors was too influenced by Musk when approving his compensation plan in 2018, and once again rejected the compensation plan.
Judge Rejects Musk's Billion Dollar Salary Plan Again
On Monday, December 2nd local time, Judge Katherine St. John McCormick of the Delaware court ruled again that Tesla CEO Elon Musk is not entitled to receive sky high salaries. This ruling upheld the judge's ruling in January of this year and also rejected Tesla shareholders' request to vote in June to restore the compensation plan.
According to the 2018 compensation plan, Musk will receive a portion of the reward, including company shares, for every 12 milestone goals achieved by Tesla. The amount was initially about $2.6 billion (approximately RMB 18.9 billion), but by the time the judge cancelled it, it had risen to $56 billion (approximately RMB 400 billion).
In January of this year, Katherine rejected Musk's record breaking compensation plan for the first time, stating that the compensation given by the electric car manufacturer's board of directors was an "incalculable amount", and that this huge compensation seemed to have been negotiated by directors who benefited from Musk and was unfair to shareholders. She wrote, "The scale of the largest compensation plan in history is incredible, the amount is unfathomable, and it seems to be aimed at helping Musk achieve his goal of 'creating a better future for humanity'
Catherine further stated in the latest 101 page judgment opinion that Tesla's board of directors relied too heavily on Musk when approving the compensation plan in 2018, which resulted in a conflict of interest.
In addition, Katherine believes that Tesla's proxy statement before the shareholder vote contains significant false statements that cannot be used as a basis for the legitimacy of the compensation plan. Catherine emphasized that allowing relevant votes to "correct" court rulings would lead to an endless litigation process.
It is understood that the vote mentioned by Katherine began on April 17th this year, when Tesla submitted a document to the US Securities and Exchange Commission requesting shareholder approval for CEO Musk's compensation plan that was cancelled by the judge. Subsequently, this compensation plan was approved by shareholder vote on June 13th.
[align center] (Tesla's filing with the US Securities and Exchange Commission in April. Source: SEC)