"My conclusion is that it would probably have been better not to have meddled with Musk's previous pay package from 2018. At the time, that original compensation plan was designed to pay Musk as much as $56 billion, but only if Tesla hit a series of performance targets that were considered wildly unobtainable back then. Shareholders signed off, along with Tesla's board."
"By 2024, Tesla had hit these almost impossible goals, and the spoils began flowing to Musk. But then, a judge in Delaware, where Tesla was incorporated, challenged the pay package. She questioned the independence of Tesla's board, saying Musk wielded too much control over the process of approving the $56 billion plan. The judge won. It was an impressive victory."
Tesla's 2018 compensation plan could pay Musk up to $56 billion if stringent performance targets were met, and shareholders and the board approved it. By 2024 Tesla reached those targets, triggering payouts, but a Delaware judge overturned the package, citing insufficient board independence and Musk's excessive influence. Following the ruling, Tesla, Dropbox and others reincorporated outside Delaware, and Texas and Nevada revised corporate codes to be more company-friendly. Those legal changes reduced barriers to large executive compensation. Tesla's new $1 trillion pay proposal exemplifies how jurisdictional shifts and relaxed corporate laws can enable very large executive awards.
Read at Business Insider
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