© Reuters. FILE PHOTO: Tesla and SpaceX’s CEO Elon Musk pauses during an in-conversation event with British Prime Minister Rishi Sunak in London, Britain, Thursday, Nov. 2, 2023. Kirsty Wigglesworth/Pool via REUTERS
(Reuters) – A Delaware judge tossed out Elon Musk’s record-breaking $56 billion Tesla (NASDAQ:) pay package on Tuesday, calling the compensation granted by the EV maker’s board “an unfathomable sum” that was unfair to shareholders.
Here are some reactions to the ruling:
KRISTIN HULL, FOUNDER OF NIA IMPACT CAPITAL, WHICH OWNS TESLA SHARES:
The court’s decision “really speaks to the power of a shareholder to get involved with the board is not doing its job. We’ve seen the board is beholden to him. This is the bro-show.
“This company and this particular CEO see themselves as above the law in a lot of ways.”
ADAM BADAWI, PROFESSOR OF LAW AT UNIVERSITY OF CALIFORNIA, BERKELEY:
“If this ruling stands, it will put a sizable dent into his net worth.
“I think essentially what the court is saying is like, ‘Look, we’re not literally taking money out of Elon Musk’s pocket,’ although he certainly will feel that way because he hasn’t exercised shares. So the board can redo, they can give him a new grant in a way that has better process and in a way where the amount is justified by what matters to Tesla shareholders.”
ROSS GERBER, PRESIDENT AND CEO AT GERBER KAWASAKI WEALTH & INVESTMENT MANAGEMENT:
“The current board can’t negotiate a new pay package for Musk because they’ve already been ruled non-independent. They need an independent board of directors and they’re gonna need to sweep out at least three or four directors to really find independent people to negotiate this pay contract or else it will be voided. So essentially, the entire corporate structure of Tesla has been deemed, like not appropriate for a public company.”
JOHN COFFEE, PROFESSOR AT COLUMBIA UNIVERSITY LAW SCHOOL:
“He may appeal because he has little to lose from appealing. I would not expect the (Delaware Supreme Court) to reverse the chancellor but it certainly could happen. As for a ‘shakeup of the board,’ it need not be that dramatic – one or two clearly independent directors are all that is needed.”
