Elon Musk finally won’t get his $56 billion payday

Elon Musk missed out on a $56 billion payday, and now it’s time to unveil the world’s smallest violin. While the 103-page ruling leaves much to be explained, Tesla shareholders in 2018 voted in favor of a proposal to grant performance-based stock options to Musk. A judge later blocked the proposal, and shareholders ultimately voted to award Musk a second shot.

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Fast forward to today, and Chancellor Catherine McCormick says the effort is nonsense. In her ruling, she declared that “a large group of talented defense companies have exercised their creativity in approving arguments, but their unprecedented theories run counter to multiple pressures of established law.” She went on to mention four fatal flaws, including ” There is no procedural basis for overturning an adverse post-trial decision based on evidence created after trial.”

More: Elon Musk gets shareholder-approved multi-billion payday

The judge also stated that the claim of common law approval had no basis in common law, stating that “even if a shareholder vote could have the effect of approval, that effect cannot be achieved here due to multiple material misstatements in the proxy statement. “While there was a lot of legalese, the judge said these four issues alone were enough to defeat a motion to modify the ruling.

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Interestingly, the judge dismissed the lawsuit as the plaintiffs’ attorneys were seeking $5.6 billion worth of Tesla stock. She said it was a “bold request” in a case of exorbitant compensation.

McCormick acknowledged, however, that their method of calculating this figure was reasonable because Delaware courts award fees based on a percentage of the value of benefits realized. Still, she pointed to a previous Delaware Supreme Court decision involving a huge windfall for lawyers. Ultimately, the judge awarded $345 million in damages, which the defendants could pay in cash or freely traded stock.

While this is CliffsNotes’ version, CNBC noted that Musk could appeal the decision to the Delaware Supreme Court. Given the risks, this seems almost certain.

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