Elon Musk’s $56 billion pay package unfair: US judge
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san francisco (Uttam Hindu News): A US judge has ruled that Elon Musk’s $56 billion pay package is unfair and the Tesla board will need to come up with a new pay proposal.
The ruling, issued by Judge Kathleen McCormick in the Delaware Court of Chancery, means Musk can’t keep his 2018 compensation package. In his decision, McCormick wrote that Tesla “had to bear the burden of proving that the compensation plan is fair, and they failed to meet their burden.”
“Never incorporate your company in the state of Delaware,” Musk posted on Instagram after the decision.
He later posted a poll asking whether Tesla should change its incorporation state to Texas. According to the referendum “Should Tesla change its state of incorporation to Texas, home of its physical headquarters?” ,
The compensation plan approved by shareholders in 2018 included 20.3 million stock option awards divided into 12 tranches of 1.69 million shares each.
Under the agreement, the options vest in 12 pay increments if Tesla achieves specific milestones on market cap, revenue and adjusted earnings (except for certain one-time charges such as stock compensation).
In his ruling, McCormick described the process for approving Musk’s compensation plan as “deeply flawed.”
“The process of coming up with Allen’s comp plan was not independent,” he wrote, “because Allen controlled the board and the directors who approved the plan were not actually independent. Furthermore, the shareholders who approved the comp plan were not made aware of this controlling relationship. Therefore the $55.8 billion COMP plan has been cancelled.”
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