Elon Musk had his pay package voided by Judge Kathaleen McCormick early in 2024 and she upheld that decision in December. I don't know your thoughts on Elon Musk, or what you think about someone getting a 56 billion dollar bonus, but, I find this decision to be one of the most un-American things I have ever seen come out of the court system. Just a couple of thoughts:
1. Musk upheld his end of the bargain to earn this bonus, but, the judge didn't come back and say "I think you only deserve half, or 10 billion," she said he could not be paid any of the bonus...zero, zilch, nada. That is crazy.
2. Since she denied the bonus, the Tesla board voted again to pay Musk the 56 billion, and she reaffirmed her decision that she thinks he should get zero.
3. McCormick said the process leading to approval of the pay package was “deeply flawed.” I thought Judges ruled on the law, not on flawed business practices. Unless, her ruling says that what Tesla and Musk did was outright illegal and backs it up with precedent and facts, then she is just an activist, not a judge.
4. From a CNBC article:
As part of Monday’s opinion, McCormick approved a $345 million attorney fee award for the lawyers who successfully sued on behalf of Tesla shareholders in order to void Musk’s pay plan.
Some how this judge has a problem with Musk getting paid an agreed upon amount for work done, but, has no issue with activists buying stock to give them standing to sue Musk and forcing Tesla to pay the lawyers that sued them 345 million dollars. A little Googling shows that their were nine lawyers that sued Tesla. I am sure there were plenty of paid associates also working the case, but even so, this judge is ok paying 40 million dollars apiece to lawyers for less than a years worth of work, but, not paying Musk for growing the most successful auto company of the last 100 years.
5. You can think 56 billion is too much money to pay one person, and as a stockholder, you can be upset. You shouldn't be too upset, though. When the pay package was put into place in 2018, Tesla stock was around 20 dollars, it is almost 400 today. So, all these stockholders got paid (including Musk) but, the person behind this growth is not entitled to be paid the agreed rate for that success.
Listen, don't be sad for Musk, his net worth has grown much more than the 56 billion he is waiting on just since the judge made this ruling. On top of that, he will eventually get paid this money, as well. He will appeal until he gets a judge who is not a bitter activist and that new judge will say, "Yeah Tesla agreed to pay him this money if he full-filled his duty, and he did, so pay him." He is also currently moving to be incorporated in Texas, which will have no problem with him getting paid.
I just have a real problem with a Judge having the ability to stop a contractual payment that both sides agreed on, and still agree on 6 years later, just because she doesn't like it.
Please comment if you disagree, I would love to hear the arguments from the other side.
