Judge Reaffirms Block on Elon Musk's $55.8 Billion Tesla Pay Package Despite Shareholder Vote

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A Delaware judge has doubled down on her rejection of Elon Musk's record-breaking $55.8 billion compensation package from Tesla, dismissing the company's attempt to revive the deal through a shareholder vote.

In a decisive court ruling, Chancellor Kathaleen McCormick of Delaware's Court of Chancery maintained her January decision that voided Musk's pay package as excessive and unfair to shareholders. The judge rejected Tesla's argument that a June shareholder vote could override her original verdict.

The court identified several critical problems with Tesla's ratification effort, including misleading statements in materials presented to shareholders about how their votes would impact the case. "The motion to revise is denied," McCormick stated firmly in her filing, adding that while defense attorneys showed creativity in their arguments, their legal theories contradicted established precedent.

Tesla quickly responded on Musk-owned platform X (formerly Twitter), announcing plans to appeal the decision. "Shareholders should control company votes, not judges," Musk declared in his own post on the social media site.

The court also addressed attorney fees in the case, awarding $345 million - far below the staggering $5.6 billion requested by lawyers representing plaintiff Richard Tornetta, a Tesla investor who challenged Musk's compensation plan. While acknowledging the fee calculation method was technically correct under Delaware law (which bases awards on percentage of benefit achieved), McCormick ruled such an enormous payout would be unreasonably excessive.

Originally approved by shareholders in March 2018, Musk's unprecedented compensation plan was structured around ambitious performance milestones tied to Tesla's market value and operational achievements. The package helped propel Musk to become the world's wealthiest individual as he successfully guided Tesla through its remarkable growth phase.

Tornetta had argued that board members failed their fiduciary duties when approving what he called an "unjustified enrichment" scheme for their celebrity CEO. The lawsuit claimed directors lacked sufficient independence from Musk when negotiating terms of his pay package - allegations strongly denied by both executives and board members during trial proceedings two years ago.

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