[Fox Business] Elon Musk’s $56 billion pay package voided by judge

A Delaware judge ruled in favor of Tesla investors who sued to challenge the $56 billion pay package for Tesla CEO Elon Musk, a court filing showed.

“This decision dares to ‘boldly go where no man has gone before,’ or at least where no Delaware court has tread,” the opinion stated. “The collection of features characterizing Musk’s relationship with Tesla and its directors gave him enormous influence over Tesla.”

In her ruling, the judge said, “The plaintiff is entitled to recission,” and directed the two parties to confer on a final form of order to implement her decision and to submit a joint letter identifying all issues, including fees, that need to be addressed to bring the matter to a conclusion at the trial level. The ruling may be appealed to the Delaware Supreme Court.

She added that Tesla was “unable to prove that the stockholder vote was fully informed because the proxy statement inaccurately described key directors as independent and misleadingly omitted details about the process.” That left the company “with the unenviable task of proving the fairness of the largest potential compensation plan in the history of public markets” – a task she said “proved too tall an order” despite a group of talented defense attorneys.

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Tesla’s agreement with Musk is by far the largest compensation ever provided to an executive and is a major factor in making him one of the world’s wealthiest individuals. It allows Musk to buy Tesla stock at heavily discounted prices as escalating financial and operational goals are met – though it requires him to hold the acquired stock for five years.

Musk qualified for all 12 tranches, or performance targets, in the compensation plan and wasn’t guaranteed any salary.

MUSK WANTS MORE VOTING CONTROL AT TESLA BEFORE EXPANDING AUTOMAKER’S AI WORK

The company argued during a week-long trial that Tesla was paying to ensure one of the world’s most dynamic entrepreneurs continued to dedicate his attention to the electric vehicle maker. Antonio Gracias, a Tesla director from 2007 to 2021, said the package is a “great deal for shareholders” because he said it led to the company’s extraordinary success. 

Gracias was a compensation committee member who had longstanding business relationships with Musk and was close enough to him personally that he vacationed with the billionaire’s family, the judge noted.

Attorneys for the plaintiff, investor Richard Tornetta, said the Tesla board never told shareholders that the goals were easier to achieve than the company was acknowledging and that internal projections showed Musk was on track to qualify for large portions of the pay package.

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They also argued that the Tesla board had a duty to offer a smaller pay package or look for another CEO and that they should have required Musk to work full-time at Tesla instead of allowing him to work on other projects as well.

Musk acquired social media company Twitter in 2022, which he renamed X last year, and has launched several other startups including brain implant company Neuralink, tunneling venture the Boring Company and commercial space company SpaceX.

Musk took to X to respond to the ruling and wrote, “Never incorporate your company in the state of Delaware.”

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Tesla shares were down as much as 3.6% in after-hours trading following the ruling. Year-to-date the stock is off over 22% after the automaker forecaster slower growth in 2024. 

The ruling will put Tesla’s next round of compensation negotiations with Musk in the spotlight. He recently said he would be uncomfortable expanding Tesla’s AI work without having 25% voting control of the company. At the time of his comments in mid-January, Musk owned about 13% of the company.

Tesla did not immediately respond to a request for comment.

Reuters contributed to this report.

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[Fox Business] LARRY KUDLOW: This Senate bill will continue the asylum problem

Here’s my take on the illegal immigration catastrophe. Former President Donald Trump sent out a Make America Great Again circular today entitled: “Biden has done all he can to open the border.” 

Mr. Trump argues that Biden terminated his successful Remain in Mexico policy. Biden signed an executive order on his first day in office to halt the construction of the border wall. 

Biden reinstated “catch and release.” Biden ordered ICE to stop worksite immigration enforcement and Biden stopped deporting illegal immigrants who were in the country illegally. Plus, I would add, Biden ended Title 42, a pandemic health check used to secure the border.

SUPER BOWL FLIGHTS ADDED WITH TAYLOR SWIFT, TRAVIS KELCE-THEMED NUMBERS   

Now, as we know, the three-year Biden number is — at least — roughly 8 million illegals, with all the sex and drug trafficking, fentanyl killing, and law and order disrupting that goes along with this disaster. The House of Representatives has passed H.R. 2, which is a superb bill that would essentially restore the Trump approach: build the wall, Remain in Mexico, and catch-and-deport. 

The Senate is now crafting its own bill. We don’t know all the details, because so far there’s no legislative text, but various Senate leaks talk about something called a “trigger” authorization. This is a very bad idea. 

This “trigger” would allegedly curb immigration if 8,500 illegals arrive at the border in one day, or 5,000 illegals arrive for seven days in a row. In December, the daily encounters averaged nearly 10,000. 

So, I don’t believe for one minute that President Biden or Homeland Security Secretary Alejandro Mayorkas will “close the border”. Whether it’s 5,000 or 8,500 — that is way too high. 

House Speaker Mike Johnson calls for a policy of zero tolerance. He is right and if Mr. Biden and the Senators believe they can close the border after 5,000 or 8,500 arrive daily, then how about just closing the border now? Period. Full stop. End of sentence. 

What we know about the Senate bill is it will continue the parole problem, continue the asylum problem, it is loaded with loopholes and it will not end the Biden open-border policy of catch and release. Migrants will not be detained or sent home, awaiting asylum decisions and there is no Remain in Mexico. 

There is no help from a Mexican military presence of 25,000 troops, such as what Mr. Trump got through negotiation and there is no wall in the Senate bill. There is no Title 42 in the Senate bill. From what we know now, the Senate bill is a very bad idea and Mr. Trump and the House GOP and hopefully a majority of Republican senators should definitely oppose it. 

This article is adapted from Larry Kudlow’s opening commentary on the January 30, 2024, edition of “Kudlow.”     

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