A Delaware judge ruled on Monday that Tesla CEO Elon Musk still is not entitled to receive a $56 billion compensation package despite shareholders of the electric vehicle company voting to reinstate it.
The ruling by the judge, Chancellor Kathaleen McCormick of the Court of Chancery, follows her January decision that called the pay package excessive and rescinded it, surprising investors, and cast uncertainty over Musk’s future at the world’s most valuable carmaker.
Musk did not immediately respond to an emailed request for comment.
Tesla has said in court filings that the judge should recognize a subsequent June vote by its shareholdersin favor of the pay packageforMusk, the company’s driving force who is responsible for many of its advances, and reinstate his compensation.
McCormick said Teslas board was not entitled to hit reset to restore Musks pay package.
Were the court to condone the practice of allowing defeated parties to create new facts for the purpose of revising judgments, lawsuits would become interminable, she said in her 101-page opinion.
She also said Tesla made multiple material misstatements in its proxy statement regarding the vote, and could not claim the vote was a cure-all to justify restoring Musks pay.
Taken together, the problems with Teslas arguments pack a powerful punch, she wrote.
Tesla shares fell 1.4% in after hours trade, after the ruling.
McCormick also ordered Tesla to pay the attorneys who brought the case $345 million, well short of the $6 billion they initially requested. She said the fee could be paid in cash or Tesla stock.
We are pleased with Chancellor McCormicks ruling, which declined Teslas invitation to inject continued uncertainty into Court proceedings,” said a statement from Bernstein Litowitz Berger & Grossmann, one of the three law firms for the plaintiff.
The law firm also said it looked forward to defending the court’s opinion if Musk and Tesla appealed.
Musk and Tesla can appeal to the Delaware Supreme Court as soon as McCormick enters a final order, which could come as soon as this week. The appeal could take a year to play out.
After the January ruling, Tesla shareholders flooded the court with thousands of letters arguing that rescinding Musk’s pay increased the possibility he would leave Tesla or develop some products like artificial intelligence at ventures other than Tesla.
Attorneys for shareholder Richard Tornetta, who sued in 2018 to challenge Musk’s compensation package, had argued that Delaware law does not permit a company to use a ratification vote to essentially overturn the ruling from a trial.
McCormick in January found that Musk improperly controlled the 2018 board process to negotiate the pay package. The board had said that Musk deserved the package because he hit all the ambitious targets on market value, revenue and profitability.
But the judge criticized Tesla’s board as “beholden” to Musk, saying the compensation plan was proposed by a board whose members had conflicts of interest due to close personal and financial ties to him.
After the January ruling, Musk criticized the judge on his social media platform X and encouraged other companies to follow the lead of Tesla and reincorporate in Texas from Delaware, although it is unclear if any companies did so.
The judge in her January ruling called the pay package the “biggest compensation plan ever – an unfathomable sum.” It was 33 times larger than the next biggest executive compensation package, which wasMusk’s 2012 pay plan.
As of Monday, the pay package was worth $101.4 billion, according to Equilar, a compensation consulting firm.
Musk’s 2018 pay package gave him stock grants worth around 1% of Tesla’s equity each time the company achieved one of 12 tranches of escalating operational and financial goals.
Musk did not receive any guaranteed salary. Tornetta argued that shareholders were not told how easily the goals would be achieved when they voted on the package.
The rate of inflation has risen by more than expected on the back of fuel and food price pressures, according to official figures which have prompted accusations of an own goal for the chancellor.
The Office for National Statistics (ONS) reported a 3.6% level for the 12 months to June – a pace not seen since January last year.
That was up from the 3.4% rate seen the previous month. Economists had expected no change.
ONS acting chief economist Richard Heys said: “Inflation ticked up in June driven mainly by motor fuel prices which fell only slightly, compared with a much larger decrease at this time last year.
“Food price inflation has increased for the third consecutive month to its highest annual rate since February of last year. However, it remains well below the peak seen in early 2023.”
A key driver of food inflation has been meat prices.
More from Money
Beef, in particular, has shot up in cost – by more than 30% over the past year – according to Association of Independent Meat Suppliers data reported by FarmingUK.
Image: Beef has seen the biggest percentage increase in meat costs. Pic: PA
High global demand alongside raised production costs have been blamed.
But Kris Hamer, director of insight at the British Retail Consortium, said: “While inflation has risen steadily over the last year, food inflation has seen a much more pronounced increase.
“Despite fierce competition between retailers, the ongoing impact of the last budget and poor harvests caused by the extreme weather have resulted in prices for consumers rising.”
It marked a clear claim that tax rises imposed on employers by Rachel Reeves from April have helped stoke inflation.
Balwinder Dhoot, director of sustainability and growth at the Food and Drink Federation, said: “The pressure on food and drink manufacturers continues to build. With many key ingredients like chocolate, butter, coffee, beef, and lamb, climbing in price – alongside high energy and labour expenses – these rising costs are gradually making their way into the prices shoppers pay at the tills.”
Chancellor Rachel Reeves said of the data: “I know working people are still struggling with the cost of living. That is why we have already taken action by increasing the national minimum wage for three million workers, rolling out free breakfast clubs in every primary school and extending the £3 bus fare cap.
“But there is more to do and I’m determined we deliver on our Plan for Change to put more money into people’s pockets.”
The wider ONS data is a timely reminder of the squeeze on living standards still being felt by many households – largely since the end of the COVID pandemic and subsequent energy-driven cost of living crisis.
Record rental costs alongside elevated borrowing costs – the latter a result of the Bank of England’s action to help keep a lid on inflation – have added to the burden on family budgets.
Please use Chrome browser for a more accessible video player
8:30
Is the cost of living crisis over?
Most are still reeling from the effects of high energy bills.
The cost of gas and electricity is among the reasons why the pace of price growth for many goods and services remains above a level the Bank would ideally like to see.
Added to that is the toll placed on finances by wider hikes to bills. April saw those for water, council tax and many other essentials rise at an inflation-busting rate.
The inflation figures, along with employment data due tomorrow, are the last before the Bank of England is due to make its next interest rate decision on 7 August.
The vast majority of financial market participants, and many economists, expect a quarter point cut to 4%.
That forecast is largely based on the fact that wider economic data is suggesting a slowdown in both economic growth and the labour market – twin headaches for a chancellor gunning for growth and juggling hugely squeezed public finances.
Professor Joe Nellis, economic adviser at the advisory firm MHA, said of the ONS data: “This is a reminder that while price rises have slowed from the highs of 2021-23, the battle against inflation is far from over and there is no return to normality yet – especially for many households who are still feeling the squeeze on essentials such as food, energy, and services.
“However, while the Bank of England is expected to take a cautious approach to interest rate policy, we still expect a cut in interest rates when the Monetary Policy Committee next votes on 7th August.
“Despite inflation at 3.6% remaining above the official 2% target, a softening labour market – slowing wage growth and decreasing job vacancies – means that the MPC will predict inflation to begin falling as we head into the new year, justifying the lowering of interest rates.”
Now details of the enormous accidental data breach by a British soldier that put thousands of Afghans’ lives at risk can be discussed publicly – Sam and Anne try to address some of the biggest questions on this episode.
They include:
Why did the government break the glass on using a superinjunction?
Has anyone been sacked?
Why did the Labour government keep the superinjunction in place for so long?
There’s still a bit of time to go over Rachel Reeves’ Mansion House speech. Did it reassure financiers and investors?
An Afghan man who worked for the British military has told Sky News he feels betrayed and has “completely lost (his) mind” after his identity was part of a massive data breach.
The man, who spoke anonymously to Sky News from Afghanistan, says he worked with British forces for more than 10 years.
But now, he regrets working alongside those troops, who were first deployed to Afghanistan in 2001.
Please use Chrome browser for a more accessible video player
1:59
Afghans being relocated after data breach
“I have done everything for the British forces … I regret that – why (did) I put my family in danger because of that? Is this is justice?
“We work for them, for [the] British, we help them. So now we are left behind, right now. And from today, I don’t know about my future.”
He described receiving an email warning him that his details had been revealed.
He said: “When I saw this one story… I completely lost my mind. I just thought… about my future… my family’s.
“I’ve got two kids. All my family are… in danger. Right now… I’m just completely lost.”
Spotify
This content is provided by Spotify, which may be using cookies and other technologies.
To show you this content, we need your permission to use cookies.
You can use the buttons below to amend your preferences to enable Spotify cookies or to allow those cookies just once.
You can change your settings at any time via the Privacy Options.
Unfortunately we have been unable to verify if you have consented to Spotify cookies.
To view this content you can use the button below to allow Spotify cookies for this session only.
The mistake by the Ministry of Defence in early 2022 ranks among the worst security breaches in modern British history because of the cost and risk posed to the lives of thousands of Afghans.
On Tuesday, a court order – preventing the media reporting details of a secret relocation programme – was lifted.
Defence Secretary John Healey said about 6,900 Afghans and their family members have been relocated or were on their way to the UK under the previously secret scheme.
He said no one else from Afghanistan would be offered asylum, after a government review found little evidence of intent from the Taliban to seek retribution.
But the anonymous Afghan man who spoke to Sky News disputed this. He claimed the Taliban, who returned to power in 2021, were actively seeking people who worked with British forces.
“My family is finished,” he said. “I request… kindly request from the British government… the King… please evacuate us.
“Maybe tomorrow we will not be anymore. Please, please help us.”