Being one of the wealthiest people in the world, unfortunately, involves spending a fair amount of time in court. Elon Musk knows all about that, and currently, he’s in the middle of a legal battle over his pay package from 2018. It’s potentially worth about $55 billion, and some members of Tesla’s board are now challenging it.
At the core of the argument is whether Musk dictated the terms of the pay package and if he was at any meetings where the board discussed it.
The shareholders fighting Musk on it want the deal voided because they claim Musk was involved and was the product of sham negotiations with board members not independent of Musk. The group suing Musk wants him to be forced to give back a big chunk or maybe all of the stop options he received that year.
Musk’s team said the pay plan was negotiated fairly, and the performance milestones were so big that Wall Street investors scoffed at them then. The plan called for Musk to receive stock equal to 1% of outstanding shares. This was a performance-based plan, and if Musk hit the mark, every Tesla stockholder would benefit. Musk’s total ownership would grow to roughly 28% if he achieved the milestones, which he did. Tesla’s market cap increased by $600 billion.
Musk led Tesla to all 12 market cap milestones and another 11 on the operations side. That earned him $28 billion in stock options.
Nobody seemed to be complaining when Musk grew the company from $53 billion to the point it hit $1 trillion last year. Musk’s lawyer said the comp plan was “high-risk, high-reward,” and the results benefited everybody.
One interesting note is that in this case, the same Delaware judge forced Musk to follow through on his $44 billion purchase of Twitter.
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