The ruling comes 5 years after a shareholder lawsuit accused Musk and Tesla’s board of administrators of breaching their duties to the electrical automobile producer, losing company property and unjustly enriching the billionaire.
Tesla shares slid 4% in after-hours buying and selling.
Musk had testified in November that he did not attend any conferences the place the plan was mentioned by Tesla’s board or its compensation committee, and denied that he had a hand in setting the phrases of the payout. However Chancery Courtroom Choose Kathaleen McCormick wrote in her ruling that Musk and his attorneys didn’t show that the compensation plan was honest.
“[T]he defendants bore the burden of proving that the compensation plan was honest, and so they failed to satisfy their burden,” McCormick wrote within the determination, which was posted on-line by Bloomberg Information.
She added that Musk, Tesla and their attorneys additionally didn’t show that the milestones that Musk needed to meet to obtain the pay package deal have been tough to achieve, and stated that different components of their protection didn’t make their case.
“The defendants maintained that the plan is an distinctive deal when in comparison with non-public fairness compensation plans, however they didn’t clarify why anybody would evaluate a public firm’s compensation plan with a non-public fairness compensation plan,” she added. “The defendants insisted that the plan labored in that it delivered to stockholders all that was promised, however they made no effort to show causation.”
After the choose launched her ruling, Musk wrote on X, previously often called Twitter, “By no means incorporate your organization within the state of Delaware.”
—With reporting by the Related Press.
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