Delaware

Elon Musk tries again to get a $56 billion pay plan back as his revolt roils Delaware

Published

12 months ago

March 12, 2025

Elon Musk tries again to get a billion pay plan back as his revolt roils Delaware

Elon Musk made good on his promise to appeal a controversial decision by a Delaware judge who wiped out his $56 billion performance-based compensation plan as the Tesla (TSLA) CEO leads a revolt that is roiling that state’s politics.

The billionaire, along with current and former Tesla directors, argued in an appeal to the Delaware Supreme Court on Tuesday that a refusal by Delaware Chancery Court judge Kathaleen McCormick to reinstate Musk’s pay despite approvals from Tesla shareholders contained multiple errors that should lead to the ruling’s reversal.

“Yes, Tesla has a chance” to succeed with its new appeal, said Tulane University law professor Ann Lipton. But “the situation is complicated by the fact that the entire decision has turned into a political football.”

McCormick initially voided the pay pact in January 2024 and did so for a second time last December based on the claims of a single shareholder who alleged in a purported class-action lawsuit that Musk’s influence over Tesla made him a de facto controller of Tesla.

McCormick concluded that “extensive ties” between Musk and the people negotiating the pay package and a lack of public disclosure about Musk’s relationships with those who approved the deal made it invalid under Delaware’s corporate laws.

Elon Musk and President Trump in a Tesla at the White House on Tuesday. (Pool vía AP) · ASSOCIATED PRESS

Musk responded by pledging to pull the incorporations of his many companies, including Tesla, out of Delaware.

These so-called “Dexits” were followed by decisions from executives at other companies to reincorporate elsewhere, including Bill Ackman’s hedge fund Pershing Square Capital Management, as some aired their frustrations with Delaware’s powerful Chancery Court.

The recent high-profile departures are roiling a state that, for roughly the past century, has been the dominant place to incorporate because of its so-called corporate-friendly laws, specialized business courts, and ease of filing company documents.

The state’s newly elected governor, Matt Meyer, launched a working group to study mounting complaints, and lawmakers are trying to push through a bill that would limit investor lawsuits by allowing corporate boards to further insulate their directors, officers, and controlling shareholders from liability.

The measure is not retroactive and, therefore, wouldn’t absolve Musk or other litigants from past determinations.

Semafor reported last week that the legislation was prompted by warnings from key corporate attorneys that big-name companies, including Walmart (WMT), might move out of the state.

The political drama in Delaware could play a role in what the state’s highest court decides to do about Musk’s pay.

Lipton, the Tulane professor, cited the many complications: “Musk attacking the Delaware courts, his allies threatening to leave the state, and the state legislature on the verge of passing a new statute that reads like a direct rebuke to the Delaware courts.”

“It’s not clear to me whether that’s likely to influence the Delaware Supreme Court — in either direction,” she added.

What Musk and the Tesla directors are arguing in their appeal is that the lower court applied the wrong, heightened legal test to evaluate actions taken by Tesla’s board around the compensation plan.

They said McCormick incorrectly subjected the board’s actions to the “entire fairness” standard, then misapplied it. That standard is applied to protect shareholders when a controlling shareholder negotiates a self-interested deal with the board.

Musk’s status as a limited minority stockholder at the time of the negotiations, they said, should not have led to his designation as a controlling shareholder.

The judge's bench is seen in a courtroom at the Delaware Supreme Court in Dover, Delaware, U.S., June 10, 2021. REUTERS/Andrew Kelly — The judge’s bench is seen in a courtroom at the Delaware Supreme Court. REUTERS/Andrew Kelly · REUTERS / Reuters

New York University School of Law professor Marcel Kahan said the Supreme Court will decide what particular issues to address in the case and he suspects that it will want to clarify the definition of “controlling shareholder.”

That matter is now the subject of the controversial proposed legislation in Delaware to amend the state’s corporate law. The proposed changes would exempt shareholders with less than 33.3% ownership.

“My guess is the court will want to put its five cents in on ‘controller creep,’” Kahan said, referring to the court’s expansion of circumstances that can subject a shareholder to “controller” status.

“I would not at all be surprised if the court comes to a different finding on whether Musk is a controlling shareholder than the Chancery court,” Kahan added.

Musk and the Tesla directors are also arguing that McCormick’s invalidation of a second Tesla shareholder vote about Musk’s compensation constituted yet another error because the vote showed that the electric vehicle company’s shareholders “resoundingly rejected” her initial finding that Musk was overpaid.

The fact that Tesla stockholders have since received a return of more than $700 billion on their investment in Musk, they said, shows the compensation plan exemplified alignment between executive and stockholder interests.

With McCormick’s decision, shareholders “have lost their say in compensating the company’s once-in-a-generation CEO” and “lost certainty in the company they own.”

This Jan. 4, 2019 photo shows Delaware Chancellor Kathaleen St. Jude McCormick. Refereeing a $44 billion court fight that pits the world’s richest man against one of its most influential social networking sites is surely a daunting task, but McCormick, presiding over the case has never backed away from a challenge. Billionaire Elon Musk has been battling Twitter Inc. in Delaware’s Court of Chancery since Musk announced in July 2022, that he wanted to scuttle an agreement to acquire the social media giant for $54.20 a share. (Eric Crossan via AP) — Delaware Chancellor Kathaleen St. Jude McCormick, the judge who voided Elon Musk’s pay. (Eric Crossan via AP) · ASSOCIATED PRESS

“The bottom line of the Court of Chancery’s decisions is that a compensation plan resulting in spectacular growth should be revoked because it was somehow unfair to the very stockholders who benefited from that growth and overwhelmingly approved the plan — twice.”

For Musk to keep his $56 billion, said Kahan of New York University, the court would have to reverse both McCormick’s finding that Musk was a controlling shareholder at the time he negotiated his pay deal with Tesla’s board and her finding that the shareholder revote failed to “cleanse” — take steps to legally validate — the flawed transaction.

As for cleansing, he said, “I can see the court saying, ’You were a little too tough here.’” Cleansing solely shifts the burden of proving whether $56 billion was fair from the defendants to the plaintiffs.

“If $56 billion is too high, it doesn’t follow that zero is the right amount, right? Zero may be too low.”

In that case, the court could send the case back to the lower court and instruct it to pick an amount of fair compensation.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed.

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Delaware

Elon Musk-Led Overhaul of Delaware Business Law Upheld by State Court

Published

3 hours ago

February 27, 2026

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Elon Musk-Led Overhaul of Delaware Business Law Upheld by State Court

The Delaware Supreme Court upheld the constitutionality of an Elon Musk-inspired overhaul of state law that governs most major US corporations, handing a win to company founders, insiders and private equity owners who sought less restrictive business rules.

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Delaware

Delaware County school employee accused of sex assault of minor in Texas

Published

15 hours ago

February 27, 2026

Press Room

Delaware County school employee accused of sex assault of minor in Texas

RADNOR, Pa. – Authorities say a Delaware County school employee is accused of traveling to Texas to sexually assault a minor he met online.

What we know:

Michael Robinson, 43, was taken into custody near Radnor Middle School where investigators say he worked as a paraprofessional.

Investigators believe Robinson traveled to Tyler, Texas in the summer of 2024 to meet a minor he had connected with online.

Robinson, according to U.S. Marshals, allegedly sexually assaulted the teen over the course of a weekend.

Delaware County school employee accused of sex assault of minor in Texas

Prosecutors in Smith County, Texas charged Robinson in December with Aggravated Sexual Assault of a Child Under 15-years-old.

Robinson is being held at a Delaware County jail where he is awaiting extradition to Texas.

What they’re saying:

U.S. Marshals in Pennsylvania said Robinson’s arrest shows that “sexual predators will always be pursued relentlessly.”

The Radnor Township School District said Robinson has been placed on leave and will not have contact with students.

“Parents of the limited number of children to whom the employee was assigned were contacted by the administration immediately.”

The district said it is cooperating with law enforcement and has “no information indicating misconduct involving district students.”

Crime & Public SafetyDelaware CountyNews

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Delaware

Rehoboth cancels 2026 Polar Bear Plunge after major snowstorm

Published

1 day ago

February 26, 2026

Press Room

Rehoboth cancels 2026 Polar Bear Plunge after major snowstorm

Rehoboth Beach has canceled the upcoming 2026 Lewes Polar Bear Plunge and 5K Run to the Plunge as the Sussex County resort town continues dealing with the aftermath of last weekend’s snowstorm, organizers of the annual Special Olympics fundraiser said on Feb. 26.

“Rehoboth Beach is navigating significant challenges because of the snowstorm,” a Special Olympics Delaware email announced. “At present, the boardwalk and all beach crossings remain snow covered and many sidewalks throughout downtown Rehoboth are as well.”

The plunge and 5K had been rescheduled to March 1 after severe weather conditions in late January caused it to be moved from its original Feb. 1 date.

The plunge will not be rescheduled for this year.

Last weekend’s storm brought nearly 2 feet of snow to parts of Sussex, closing hundreds of roads when trees and wires were downed. There were also power outages across the county, including Rehoboth Beach which had to restore power to its wastewater treatment facility.

Plunging for a cause

The polar bear plunge is one of Special Olympics Delaware’s more popular fundraisers, drawing more than 4,000 participants last year.

In recent years, the event has been bringing in more than a million dollars for Special Olympics Delaware. Last year, plunge events drew $1.3 million, just shy of the record-breaking $1.5 million raised in 2024.

Alex Seymore, Special Olympics Delaware’s director of digital media, said the organization had already raised more than $1 million from this year’s event.

“We expect a small impact,” Seymore told Delaware Online/The News Journal. “But again, we’re showing that we’ve raised over a million dollars.

He added they are reviewing how the cancelation will impact them and their services.

“It’s been just a couple hours, so we’re not completely positive how it will impact things in the long run,” he said. “We’re thankful for everybody that’s helped raise this money through this time.”

What is still occurring

While the plunge and 5k and been canceled this year, there are other indoor events that will continue as scheduled:

Feb. 27

4 p.m. to 7 p.m. – pick up packets and souvenir sales for the Plunge and 5K Run to the Plunge at the Rehoboth Beach Convention Center, 229 Rehoboth Ave, Rehoboth Beach.

Feb. 28

noon to 2 p.m. Fire & Ice in the Atlantic Sands Ballroom, 1 Baltimore Ave, Rehoboth Beach.
2:30 p.m. to 5 p.m. Restaurant chili contest.
4 p.m. to 7 p.m. – pick up packets and souvenir sales for the Plunge and 5K Run to the Plunge at the Rehoboth Beach Convention Center, 229 Rehoboth Ave, Rehoboth Beach.

Send tips or story ideas to Esteban Parra at (302) 324-2299 or eparra@delawareonline.com.

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