A Delaware appeals court cleared the way Friday for Elon Musk to receive a long-disputed $56 billion payout package from Tesla, reversing an earlier ruling in the protracted case.
The Delaware Supreme Court’s decision overturned two previous rulings issued by Chancellor Kathaleen McCormick of the state’s Court of Chancery, setting the stage for the world’s richest person to receive another major financial windfall.
In two rulings issued in early 2024, McCormick invalidated the 2018 compensation package, which was once considered historically large but has since been dwarfed by Musk’s most recent Tesla pay package.
The five-judge panel determined that McCormick improperly ordered a termination, which would have resulted in the complete cancellation of Musk’s package.
The ruling said: “It is indisputable that Musk fully complied with the 2018 grant, and Tesla and its shareholders were rewarded for their work,” thus reversing the previous termination.
Although the 2018 package was approved by a majority of Tesla shareholders, it was challenged in court by shareholder Richard Tornetta, who argued that the award was excessive.
In a statement posted online Friday, lawyers representing Tesla shareholders said they were considering their next steps.
In January 2024, the court vacated the award after a five-day trial, calling the approval process “deeply flawed.”
The court concluded that the board had proven vulnerable to manipulation by Musk, identified as the “paradigmatic superstar CEO” by McCormick, who upheld its determination in December 2024 after an appeal.
Despite the legal challenges, Tesla’s board has consistently supported Musk throughout the saga, approving interim severance packages worth about $29 billion in August and later unveiling a new pay package potentially worth up to $1 billion.
On November 6, Tesla shareholders easily approved this latest package, which is tied to several performance and valuation targets.
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