Delaware Chancery Court Chief Judge Kathleen McCormick on Tuesday struck down Tesla, Inc. (NASDAQ:TSLA) CEO Elon Musk‘s $55 billion 2018 compensation plan. The decision comes more than a year after the trial concluded. Disgruntled Tesla shareholders initiated the lawsuit, challenging the board’s approval of Musk’s substantial pay package, a majority of which comprises granted options.
Uncertainty Rules High: Many analysts and investors agree that the verdict introduces uncertainty at a challenging time for Tesla.
Future Fund‘s Gary Black noted that Tesla can now appeal the decision to the Delaware Supreme Court, and eventually to the Supreme Court. Alternatively, the board can devise an alternative 2018 compensation package. Black said that “either way the uncertainty continues.” Offering a potential solution, Black suggested that moving forward, Musk should allow the compensation committee and board to independently formulate his CEO compensation plan.
Ross Geber, CEO of Gerber Kawasaki Wealth and Investment Management, remarked that it’s “Not a good day for Musk,” echoing concerns about the impact of the decision.
CNBC “Mad Money” host Jim Cramer is also seeking answers after the verdict. “Really curious now that Musk’s pay package is invalidated whether, somehow, he goes for more control and less cash,” he asked. Cramer recently took potshots at Musk for his recent push for 25% voting control in Tesla.
Wedbush analyst Daniel Ives reiterated Musk’s significance to Tesla in a CNBC interview. Calling the verdict a “jaw-dropper,” Ives said, “Musk is Tesla, Tesla is Musk.” He sees the board fighting back and potentially offering 25% voting control to the Tesla CEO. “It’s a pivotal moment for Tesla,” he said.
See Also: Everything You Need To Know About Tesla Stock
Tesla CEO Reacts: Musk reacted to the court ruling on his social media platform, X, expressing exasperation and running a poll asking followers whether Tesla should change its place of incorporation to Texas. A majority of respondents favored the move.
Should Tesla change its state of incorporation to Texas, home of its physical headquarters?
— Elon Musk (@elonmusk) January 31, 2024
Musk also responded to observations by his fan following. A Tesla influencer…
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