Delaware Court Rejects Musk’s Pay Package for Second Time
A Delaware Court has rejected Tesla’s attempt to reinstate Elon Musk’s court-rescinded options despite Tesla’s shareholders “ratification” of the options. Tesla and Musk could appeal the latest court decision or the earlier decision which initially struck down the Musk option grant. Separately, the Court approved record-setting attorney fees in the amount of $345 million, down […]
Donald Kalfen is a Partner at Meridian Compensation Partners. This post is based on his Meridian Compensation Partners memorandum and is part of the Delaware law series; links to other posts in the series are available here.
A Delaware Court has rejected Tesla’s attempt to reinstate Elon Musk’s court-rescinded options despite Tesla’s shareholders “ratification” of the options.
Tesla and Musk could appeal the latest court decision or the earlier decision which initially struck down the Musk option grant.
Separately, the Court approved record-setting attorney fees in the amount of $345 million, down from the initial fee request of $5.6 billion.
Background
The saga of Elon Musk’s option mega-grant continues. Shareholders first approved the multi-billion-dollar option grant in 2018. A Delaware court judge rescinded the grant on January 30, 2024, followed by a shareholder vote ratifying the rescinded option grant on June 13, 2024. On June 30, 2024, Tesla filed a motion with the Delaware court seeking reinstatement of the option grant on the basis of this shareholder ratification. On December 2, 2024, the Delaware court rejected Tesla’s motion and let stand its decision to rescind the grant.
Against this backdrop, Tesla’s market capitalization has increased from approximately $50 billion to an extraordinary $1 trillion+ over the same time period. This increase in market capitalization has driven the in-the-money value of these options to approximately $100 billion!
