Elon Musk’s big pay package sends Tesla’s board to court
A Delaware judge ruled Friday that electric car-maker Tesla must go to trial to defend Elon Musk’s multimillion-dollar pay package, which a lawsuit said breached fiduciary duty and unfairly enriched Tesla’s founder and chief executive officer.
The 2018 deal was estimated to be worth $2.6 billion when it was approved by shareholders in March, but analysts said it could be worth up to a whopping $70 billion if the company grew quickly.
Tesla’s stock, closed down more than two percent on Friday and is down more than 27 percent year-to-date.
Musk’s compensation award does not include a salary or cash bonus, according to Reuters, but it does set rewards based on Tesla’s market value rising to as much as $650 billion over the next decade. It also comes with stock options and doesn’t require that Tesla hit profitability metrics.
The package was approved with 73 percent of shareholder votes cast.
The electronic car giant requested to dismiss the lawsuit filed by shareholder Richard Tornetta, Reuters reported, but Vice Chancellor Joseph Slights of the Delaware Court of Chancery ruled against that bid.
This isn’t the first time a big brand has come into the spotlight over alleged unfair pay practices. A 2018 report from the AFL-CIO labor federation found the average chief executive of an S&P 500 company made 287 times more money than their median employee.
The report, which called out companies like Gap, Inc. and McDonald’s, said Musk made 40,668 times more than the median Tesla worker.