Musk launches appeal to restore $56 billion Tesla payday

Tom Hals

Tue, Mar 11, 2025, 3:30 PM 3 min read

By Tom Hals

WILMINGTON, Delaware (Reuters) - Elon Musk kicked disconnected his entreaty to effort to reconstruct his $56 cardinal payday from Tesla connected Tuesday, claiming a little tribunal justice made aggregate ineligible errors successful rescinding the grounds compensation.

The 2018 wage bundle resulted successful spectacular maturation for the electrical conveyance shaper and yet it was determined by the little Court of Chancery to beryllium unfair to shareholders, who voted doubly to o.k. the plan, Musk argued.

"That counterintuitive effect defies settled principles of Delaware law, dependable firm governance, and communal sense," said the opening entreaty little by Musk and the existent and erstwhile Tesla directors who are defendants successful the case.

In January 2024, Chancellor Kathaleen McCormick rescinded the wage bundle of banal options, calling it "unfathomable." She said it was unfair to Tesla shareholders due to the fact that the directors who approved it were beholden to Musk and Tesla withheld cardinal accusation from investors earlier they voted to o.k. it.

In June, Tesla got shareholder support for the wage bundle for a 2nd time, but the justice rejected that arsenic grounds for reversing her ruling.

The wage bundle had awarded Musk options to bargain astir 303 cardinal Tesla shares astatine astir $23 each if the institution deed show and valuation goals. Tesla banal closed Tuesday astatine $230.58.

Tesla has said creating a caller wage bundle of akin worth could effect successful a complaint of $25 billion, making the entreaty an important avenue for restoring Musk's compensation and keeping his attraction connected Tesla.

Musk has said that helium wants a greater involvement successful Tesla oregon helium mightiness make products extracurricular of the company. The entreaty comes arsenic helium is dedicating clip to President Donald Trump's authorities ratio effort, known arsenic DOGE, which has sparked demonstrations extracurricular Tesla dealerships. The banal has fallen sharply successful caller weeks.

In the entreaty brief, Musk and the different defendants said McCormick wrongly applied a precise hard ineligible modular known arsenic full fairness to measure the wage package.

She arrived astatine that modular by uncovering Musk, who owned 21.9% of the banal astatine the clip the committee approved the wage package, controlled the wage negotiations, according to the brief. In addition, she wrongly determined that mean concern relationships among directors made them conflicted and she erroneously faulted Tesla's disclosures up of the 2018 shareholder vote, according to the brief.

Applying the full fairness modular amounted to granting a "license to sue" to Tesla shareholders, the little said. The suit was brought by Richard Tornetta, a Tesla capitalist who owned 9 shares erstwhile helium filed the lawsuit successful 2018. The suit benefits Tesla, not Tornetta, successful what is known arsenic a derivative suit.