Tesla shares fall as judge invalidates Musk’s $56 billion compensation plan

Tesla (TeslaShares fell slightly on Tuesday night after a judge invalidated CEO Elon Musk’s $56 billion stock compensation plan.


A Delaware judge has invalidated Elon Musk’s $56 billion compensation plan, siding with the defendants and finding that Tesla’s board of directors acted improperly in crafting the compensation agreement.

“Musk initiated the Autopilot process, readjusting speed and direction along the way as he saw fit,” Delaware Chancery Court Chief Judge Kathhaleen McCormick wrote in the ruling. An unfair price was paid. Through this lawsuit, “Pleading for a recall. “

On the one hand, repealing the unprecedented 2018 compensation plan reduces potential dilution for shareholders. The controversial news could be seen as bullish for Tesla stock.

But Tesla’s board, known for its lack of independence, may offer Musk a new compensation plan in short order.

Meanwhile, Musk recently called for a significant increase in voting rights to 25%, above the now-defunct compensation plan. He threatened to move artificial intelligence and robotics technology from Tesla to another company if he didn’t get additional control.

After the verdict, Musk posted on X, “Never register your company in Delaware.”

Judge McCormick oversaw Musk v. Twitter, which resulted in the billionaire acquiring the social networking site for $44 billion.

Tesla Stock

Tesla’s stock price continued to fall by 2.55%.

In Tuesday’s trading, the stock price rose 0.35% to 191.59 points. Tesla shares hit an eight-month low of 182.63 on January 25 as Tesla’s earnings and guidance disappointed.

Please follow Ed Carson’s thread: @edcarson1971 andX/Twitter @IBD_ECarson Get stock market updates and more.

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