A judge in the US has blocked Elon Musk from receiving a $56bn (£47bn) pay packet from Tesla despite the company’s shareholders voting it through.
Delaware judge Kathaleen McCormick upheld her previous decision from January, in which she argued that board members were too heavily influenced by Musk, who is the CEO of Tesla.
The decision comes after months of legal battles.
Judge McCormick said the pay package for Musk would have been the largest ever for the boss of a listed company, according to the BBC. She said Tesla had failed to prove the sum was fair.
In the summer, shareholders had voted by a 75 per cent majority for the payment, which dates back to 2018, to be passed. The electric car company argued the staggering package was necessary to keep Musk involved at Tesla, the Guardian reports.
But the judge said the pay package was excessive and upheld her January ruling.
In her initial ruling from January, judge McCormick said the $56bn payment violated shareholders’ rights because the entire “negotiation” process was effectively controlled by Musk.
Part of her reasoning for this was that the board was stacked with close allies of Musk’s, such as his former divorce attorney.
On Monday, she described Tesla’s legal arguments as “fatally flawed” and at times “indefensible”.
She wrote: “The large and talented group of defense firms got creative with the ratification argument, but their unprecedented theories go against multiple strains of settled law.
“Novelty is not necessarily damning, but defendants’ novel request flies in the face of the policy bases for all relevant rules of procedure.”
Tesla has said it will be appealing the ruling.
In a statement on X, the company wrote: “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 companies rather than their rightful owners – the shareholders.”
Meanwhile, Musk stated on the platform: “Shareholders should control company votes, not judges.”
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