In a surprising turn of events, a Delaware Court of Chancery judge has nullified Tesla CEO Elon Musk’s record-breaking $56 billion pay package, calling the compensation granted by the EV maker’s board “an unfathomable sum” that was unfair to shareholders.
Chancellor Kathaleen St. J. McCormick’s ruling on January 30, 2024, brought an end to a five-year legal battle initiated by Tesla shareholders against Musk and the company’s directors.
Chancellor McCormick’s decision to cancel the $56 billion compensation awarded to Elon Musk by Tesla in 2018 has concluded a lengthy legal dispute.
Shareholders alleged that Musk and the directors breached their duties to Tesla, using company resources for Musk’s personal gain. The lawsuit argued that Musk’s influence over negotiations was excessive, leading to deceptive and incomplete information for shareholders.
A troubled legal history
In a prior case in 2022, the same judge oversaw a matter involving Twitter Inc., now X, where Musk was compelled to proceed with an acquisition. Despite this precedent, Twitter’s subsequent performance has not been remarkable. Musk responded to the court’s ruling on X by advising against incorporating a company in Delaware and recommended Nevada or Texas for decisions prioritizing shareholders.
Read More: Elon Musk Doubles Down on Crypto; Reveals His DOGE and Bitcoin Holdings!
Musk responded to the court ruling on X, his social media platform, with business advice, “Never incorporate your company in the state of Delaware.” He recommended incorporating in Nevada or Texas for shareholder-centric decision-making.
Musk’s immediate response on his social media platform reflected a mix of acknowledgment and nervous anticipation regarding the court’s decision. Investors are now concerned about the potential impact on the cryptocurrency market, speculating whether Tesla, under Musk’s guidance, may consider selling its substantial Bitcoin holdings.
Tesla’s Q4, 2023 financial report disclosed a total revenue of $25.2 billion and an operating profit of $2.1 billion. Despite the legal challenges, Tesla maintained its Bitcoin position, holding 9,720 BTC for six consecutive quarters.
Presently, Bitcoin is encountering resistance at $46,000, currently hovering at $43,014 with a 0.8% decrease in the last 24 hours. Notably, Bitcoin saw an 8.32% increase over the week, intensifying the focus on Musk’s next moves and potential shifts in the cryptocurrency landscape. Investors are closely monitoring developments.
Also Read: FOMC on Hold? Bitcoin Braces for Sideways Move Amid Rate Cut Uncertainty
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