A Delaware judge blocked Tesla CEO Elon Musk from receiving a massive multibillion dollar compensation package this week that the company’s shareholders overwhelmingly approved for him.
The ruling from Chancellor Kathaleen McCormick of the Delaware Court of Chancery, who was appointed by Delaware Democrat Governor John Carney, comes after she struck down the same deal in January when she ruled that the size of package was not fair.
McCormick awarded the plaintiff’s attorneys $345 million in the case, equivalent to $17,692 per hour for the amount of time worked, because they had to face “some of the best law firms in the country, who put Plaintiff through their paces.”
The Delaware judge’s justification for making Tesla pay $345 million (!) in attorney’s fees is:
a) Tesla had good lawyers (?)
b) Plaintiff hired an “accounting expert”
c) Billed 20,000 hours
d) Plaintiff had to come up with theory for why they deserve zillions of $$
e) that’s it pic.twitter.com/43IbfAIrJj— Gregg Re (@gregg_re) December 2, 2024
this Delaware verdict awards the plaintiff’s attorneys $17,692 per hour for suing Tesla
$345,000,000/19,499.95 hours
Judge claims it’s worth it because they “litigated effectively” and “overcame hurdles”. incredible pic.twitter.com/9f73q4PIdZ
— Gregg Re (@gregg_re) December 3, 2024
Tesla said in a statement that they will appeal the ruling because the judge’s ruling sets a dangerous precedent in which judges, not shareholders, run companies in the state of Delaware.
“A Delaware judge just overruled a supermajority of shareholders who own Tesla and who voted twice to pay @elonmusk what he’s worth,” Tesla said in a statement on X. “The court’s decision is wrong, and we’re going to appeal.”
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“This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners – the shareholders,” the company added.
A Delaware judge just overruled a supermajority of shareholders who own Tesla and who voted twice to pay @elonmusk what he’s worth.
The court’s decision is wrong, and we’re going to appeal.
This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware…
— Tesla (@Tesla) December 2, 2024
The size of the package has exploded since she first rejected the deal since the $50 billion in stock options that shareholders initially approved is now worth well over $100 billion because of the success that Tesla has had.
In June, 77% of the shareholders at Tesla voted to approve the compensation for Musk.
The New York Times noted that the package stipulated that Musk would only get the options “if Tesla’s stock price soared and its sales and earnings grew strongly.”
The Times, which has been critical of Musk, acknowledged that Musk beat naysayers who doubted that he could actually achieve the goals that were set out for him to be able to earn the package.