Tesla (NASDAQ:TSLA) stock is slipping on Wednesday after founder and CEO Elon Musk was denied his $56 billion compensation package by a U.S. court.
Delaware Chancery Court Chancellor Kathaleen McCormick is behind today’s ruling after an investor in Tesla filed a lawsuit over the compensation package. That’s despite the package being approved by the Board of Directors for the electric vehicle (EV) company.
Here’s what Judge McCormick said in her ruling on the compensation package.
“Put simply, neither the Compensation Committee nor the Board acted in the best interests of the Company when negotiating Musk’s compensation plan. In fact, there is barely any evidence of negotiations at all […] Rather than negotiate against Musk with the mindset of a third party, the Compensation Committee worked alongside him, almost as an advisory body.”
McCormick’s History With Musk
Investors in TSLA stock will note that this isn’t the first time Elon Musk has dealt with a ruling from Chancellor McCormick. The judge also ruled over Twitter’s lawsuit against Musk which forced him to acquire the company in a $44 billion deal.
Musk was unhappy about the Twitter case as well but has continued to hold the company and renamed it X. He expressed disappointment over McCormick’s ruling today, too. The Tesla CEO does have the option of appealing the decision.
TSLA stock is down 1.8% as of Wednesday morning and is down 24.4% since the start of the year.
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On the date of publication, William White did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
