A Delaware judge on Monday again blocked Elon Musk’s multibillion-dollar pay package from Tesla.
The controversial compensation agreement, which is now worth more than $100 billion, was reapproved by Tesla shareholders in June. However, Delaware Chancery Judge Kathaleen McCormick declined to overturn her earlier decision invalidating the pay package.
“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,” McCormick wrote in Monday’s opinion.
McCormick stuck down the compensation agreement in January, finding that it was not negotiated fairly. After the June shareholder vote, Musk’s lawyers asked the judge to reconsider her decision.
She declined, noting that there are no grounds for overturning a decision based on evidence created after trial, like the shareholder ratification vote, and that the ratification argument cannot be raised for the first time after the post-trial decision.
McCormick also questioned the legitimacy of the argument raised by Musk’s lawyers.
“What the defendants call ‘common law ratification’ has no basis in the common law— a stockholder vote standing alone cannot ratify a conflicted-controller transaction,” she added.
Tesla vowed to appeal the decision Monday night.
“A Delaware judge just overruled a supermajority of shareholders who own Tesla and who voted twice to pay @elonmusk what he’s worth,” the electric vehicle maker wrote in a post on X.
“The court’s decision is wrong, and we’re going to appeal,” it continued. “This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners – the shareholders.”
Musk dismissed the decision as “lawfare” and argued that “shareholders should control company votes, not judges” in a series of posts on X, which he also owns.
The value of Musk’s pay package has risen considerably as Tesla’s stock price has soared in the wake of the election. The EV maker’s share price is up nearly 45 percent since Election Day, amid expectations that President-elect Trump’s win could benefit the Tesla CEO.