Delaware

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

Published

1 year 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

All lanes open after I-69 closure in Delaware County

Published

3 hours ago

June 19, 2026

Press Room

All lanes open after I-69 closure in Delaware County

DELAWARE COUNTY, Ind. — All lanes closed on I-69 in the southbound direction in Delaware County on Friday morning.

Authorities with the Indiana State Police were dispatched to the 240.5 mile marker on a report of a crash involving a semi at approximately 8:08 a.m.

All lanes are now open.

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Delaware

After devastating fire at historic Delaware church, a summer festival carries on

Published

13 hours ago

June 19, 2026

Press Room

After devastating fire at historic Delaware church, a summer festival carries on

A fire in May ripped through Mother African Union Church’s hallowed walls and may have structurally destroyed much of the building, but it did not destroy the drive to continue a historic religious and cultural summer festival. Natasha Brown reports.

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Delaware

From blueprint to breakthrough: Tackling affordable housing in Wilmington

Published

24 hours ago

June 18, 2026

Press Room

From blueprint to breakthrough: Tackling affordable housing in Wilmington

Pennrose and JPMorganChase help neighborhoods – and residents – thrive.

Finding an affordable place to live continues to be a challenge for many as widespread housing shortages persist across the U.S. Rising home prices and high interest rates have made homeownership inaccessible for a large portion of the population. Meanwhile, as rental demand increases, the number of renters facing affordability challenges is also on the rise.

The State of the Nation’s Housing 2025 by Harvard University’s Joint Center for Housing Studies reveals that cost burdens for renters reached another record high in 2023. Similarly, the JPMorganChase Institute reports that renter affordability is declining and forcing people to devote more of their take-home pay to housing costs. There is a growing need for affordable housing across the U.S., and that rings true here in Wilmington.

To close that gap, it’s essential that all Wilmington residents share in its growth with housing options that accommodate a range of needs and budgets. For the Pennrose real estate firm, this meant delivering a concrete solution to the local community, resulting in housing for individuals and families who otherwise might not have been able to live in the area.

Reinvesting in Wilmington’s Riverside

In Wilmington, the Riverside redevelopment initiative is focused on neighborhood stability at a scale that can be felt across generations – bringing housing, education and community resources together so families can remain rooted and move forward. Imani Village, developed by Pennrose in partnership with the Wilmington Housing Authority and nonprofit community organization REACH Riverside and constructed with support from JPMorganChase, is part of this broader effort, which is expected to create more than 600 high-quality, mixed-income homes while also enhancing and expanding EastSide Charter School and Kingswood Community Center to help establish a “cradle to college/career readiness education pipeline.”

By tying new housing to strengthened local institutions, the redevelopment aims to reduce the pressure that forces families to relocate and instead keep children closer to school, neighbors closer to one another and residents connected to the services that help them thrive. In practical terms, Imani Village represents not just additional homes, but a commitment to building a neighborhood where opportunity is easier to access and easier to keep.

“We’re proud of the far-reaching impact this project will have. It reflects Pennrose’s mission to uplift our communities and expand the supply of high-quality, affordable homes,” said Brett Macleod, Community Development Banking, J.P. Morgan. “Every additional housing unit matters – and increasing the number that are affordable is critical.”

A broader commitment to Wilmington’s future

While Imani Village is foundational, the vibrancy of a community depends on much more. In Delaware, the firm provides banking services to 215,000 customers and works across sectors to expand economic opportunity. Over the last five years, JPMorganChase has invested more than $25 million in local nonprofit organizations, supported 25,000 small business clients and delivered financial health education to thousands of residents to broaden access to banking, financial health resources, homeownership and other wealth-building tools.

“As we work with local stakeholders to expand housing options, JPMorganChase’s goal is to create inclusive economic opportunity for all,” said Don Mell, Location Management, Americas East Region Lead and member of the Delaware & Philadelphia Market Leadership Team at JPMorganChase. “When our communities thrive, we all thrive.”

Learn more about affordable housing and community development at jpmorgan.com/commercial-real-estate.