Elon Musk is fighting to reinstate his $56 billion performance-based compensation plan after a controversial decision by a Delaware judge overturned it. Musk, along with current and former Tesla directors, appealed to the Delaware Supreme Court, arguing that the previous ruling contained multiple errors. The judge had voided the pay pact based on claims from a single shareholder, alleging that Musk’s influence over Tesla made him a de facto controller. Musk threatened to pull the incorporations of his companies out of Delaware, prompting other companies to consider similar actions. The political drama in Delaware has led to legislative efforts to limit investor lawsuits and protect directors, officers, and controlling shareholders from liability. The state’s Supreme Court will decide whether to address issues related to Musk’s pay, including clarifying the definition of a controlling shareholder. Musk and Tesla directors argue that the compensation plan aligned executive and stockholder interests, and shareholders overwhelmingly approved it. To keep his $56 billion, the court would need to reverse the previous ruling that Musk was a controlling shareholder and that a shareholder revote failed to validate the transaction. The outcome of the appeal will have significant implications for Musk and Tesla’s future.
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