- Title: ANALYSIS: Tesla could reintroduce Musk pay package in Texas, instead of Delaware
- Date: 3rd December 2024
- Summary: NEW YORK, NEW YORK, UNITED STATES (DECEMBER 3, 2024) (REUTERS) (SOUNDBITE) (English) ERIC TALLEY, PROFESSOR OF LAW & CO-DIRECTOR FOR MILLSTEIN CENTER AT COLUMBIA UNIVERSITY, SAYING: “The other thing that is probably worth watching here is that there's been a long-standing debate about whether corporate law should just be federalized. Whether you should just basically p
- Embargoed: 17th December 2024 23:48
- Keywords: Delaware ELON MUSK SHAREHOLDERS TESLA Texas compensation judge payout ruling
- Location: VARIOUS
- City: VARIOUS
- Country: US
- Topics: Company News Markets,Economic Events,North America
- Reuters ID: LVA008449303122024RP1
- Aspect Ratio: 16:9
- Story Text: A Delaware judge ruled on Monday (December 2) that Tesla CEO Elon Musk still is not entitled to receive a $56 billion compensation package despite shareholders of the electric vehicle company voting in June 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Kathaleen McCormick of the Court of Chancery, follows her January decision that called the pay package excessive and rescinded it, surprising investors, and cast uncertainty over Musk's future at the world's most valuable carmaker.
Eric Talley, a Professor of Law & Co-Director for Millstein Center at Columbia University told Reuters that Musk has a couple options.
"One possibility, is to go ahead and appeal this case to the Delaware Supreme Court and try to get a reversal either of the January 2024 holding or possibly a component of this one." Talley said. "Another approach that they might have, is now they're a Texas Corporation is just to re up the same incentive package in a retrospective way."
Talley said offering the same incentive package in a different state might be less appealing for tax reasons, though.
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.
Talley also discussed the idea that corporate law should be federalized, essentially nullifying any decisions that Delaware courts make in regards to corporations.
"They're going to have to be basically some sort of bureaucratic structure for the federal government to do that." he said, acknowledging that Elon Musk will simultaneously be heading up the Department of Government Efficiency under the incoming administration of President-elect Donald Trump.
"It's going to be kind of an interesting collision if that debate migrates into should Delaware law and all state corporate law become federal law, that's going to actually cause more bureaucratic bloat at the federal level and less, essentially delegating out to the states. And who knows which way that tug of war is going to go.”
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