Elon Musk, who is the CEO of Tesla, stood to bag home billions of dollars as per a compensation package which was approved by the board of Tesla Inc. however this could change due to a trial which has been ordered by a judge of Delaware.
The Judge had ruled on Friday that the board of Tesla will have to defend the compensation that goes up to multibillion dollars in a shareholders lawsuit and has denied the motion of the board to dismiss.
The judge has written that he would have had no problems in dismissing the lawsuit had Tesla not conceded that the committee that gave the composition had an involvement of Musk.
He further wrote that if the board had made sure from the very beginning of the negotiations that both the qualified decision makers of the company, an independent and fully functional committee that gave the compensation and minority stakeholders had been able to engage in a review of the award that was informed and a meaningful approval followed the review, the suspicion of the court that Musk’s influence was coercive over the award would be abated. The Plaintiff has pled though that the review taken at the board level was not separate from the influence of Musk.
The judge said that although Musk is holding only 20% of the stocks of Tesla, the influence that Musk had over the company made him a legal controller in effect.
The lawsuit has alleged that Tesla’s board had breached the fiduciary duty that it has while approving the package that this package will be unjustly enriching Musk and will be wasting the resources of the company.