Elon Musk reacted angrily to a Delaware judge’s ruling that his pay award at electric car maker Tesla was unlawful.
In a judgement on Tesla’s chief executive’s package of pay and share incentives, Judge Kathaleen McCormick ruled the US$56 billion package “unfathomable.”
McCormick wrote: “The incredible size of the biggest compensation plan ever - an unfathomable sum - seems to have been calibrated to help Musk achieve what he believed would make ‘a good future for humanity’.”
The judgement sparked an immediate response from X/Twitter owner Musk.
“Never incorporate your company in the state of Delaware,” he said.
“I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters.”
Musk’s deal allowed him to buy shares in Tesla at a big discount if agreed financial targets were met.
A disgruntled Tesla shareholder Richard Tornetta brought the action, alleging that the targets set to trigger the package were easier to hit than shareholders had been told.
Lawyers for Tornetta also said Musk had been allowed to spend too much time on other projects such as SpaceX and buying X/Twitter.
Directors at Tesla argued the scale of the remuneration had kept Musk focused on the business and had delivered huge success for the company.
Currently valued at more than US$600bn, the business is worth almost ten times the amount when the pay package was agreed.
Close Tesla watcher Wedbush Securities said the ruling has put the electric car maker’s board in a tricky spot.
Options now include drawing up a new pay package to be voted on at the next shareholder meeting or else a compensation package that gives Musk the 25% of Tesla he recently stated that he wanted.
“We ultimately believe this decision will be a catalyst for the Board to take the situation into its own hands and come up with a new comp package that could satisfy both shareholders and Musk helping put this 2018 comp package noise in the rear-view mirror.
“Musk is Tesla and Tesla is Musk and shareholders need Musk locked into Tesla through this next phase of the EV growth and AI endeavors over the coming years.”
Shares in Tesla rose 0.35% to US$191.59.