WILMINGTON, Del. (Reuters) – A Delaware judge ruled on Friday that Tesla Inc’s board of directors must defend at a trial Chief Executive Elon Musk’s multibillion dollar pay package, which a shareholder lawsuit said unjustly enriched the head of the electric vehicle company.
Tesla estimated the 2018 compensation package was worth $2.6 billion when it received stockholder approval in March 2018, although stock analysts at the time said it could be worth up to $70 billion if the company – which has yet to post an annual profit – grew quickly.
Compensation - Award - Cash - Bonus - Silicon
The compensation award includes no salary or cash bonus for the Silicon Valley billionaire Musk, but sets rewards based on Tesla’s market value rising to as much as $650 billion over the next decade.
On Friday, Vice Chancellor Joseph Slights of the Delaware Court of Chancery ruled against Tesla’s request to dismiss the lawsuit by shareholder Richard Tornetta at an initial phase in the litigation because of the way the board approved the package.
Result - Board - Allegations - Duty - Package
As a result, the board must now defend against allegations that it breached its fiduciary duty in approving the package, and that the package unfairly enriches Tesla’s CEO. The ruling opens the way for additional discovery into the decision-making process.
Tornetta had asked that the pay package be rescinded and the board of Tesla be overhauled to better protect investors.
Ruling - Tesla - Compensation - Committee - Company
The ruling turned on Tesla’s compensation committee, which the company conceded was not independent of Musk, according to Slight’s opinion....
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