Judge Kathaleen McCormick of Delaware's Court of Chancery has made a decision that Elon Musk is not entitled to a $56 billion compensation package, overturning a shareholder vote that sought to reinstate it earlier this year. This ruling, following an earlier decision by the judge in January that rescinded the pay package as excessive, has brought uncertainty to Musk's position at Tesla, the world's most valuable car manufacturer.
Tesla expressed its intention to appeal the ruling, citing that the judge had ignored the majority vote by shareholders in favor of the pay package. The legal battle is expected to escalate further as Musk and Tesla can challenge the decision in the Delaware Supreme Court once the final order is entered by Chancellor McCormick, possibly within the week. The judge highlighted in her 101-page opinion that Tesla's board did not have the authority to reset to reinstate Musk's pay package and indicated that a ratification vote like the one conducted by Tesla needed to take place before the trial began, emphasizing that a transaction involving a conflicted controller could not be ratified by the company.