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In a major setback for Elon Musk, a Delaware court has once again voided the Tesla CEO’s huge pay package, jeopardizing his active role in steering the electric vehicle giant.

Judge McCormick decided to stick with his original finding in January that the company’s board of directors was “unduly influenced” by Elon when it adopted the plan in 2018.

The stock option package, originally worth $2.6 billion, was now worth $101.5 billion as of Monday…

— Sawyer Merritt (@SawyerMerritt) December 2, 2024

In essence, Delaware Chancellor McCormick for the second time canceled Elon Musk’s $56 billion pay package that was initially approved by Tesla shareholders in 2018. As per the EV giant’s current share price, the package is worth over $100 billion!

For those who may not know, Tesla underwent a trial in the Delaware Court of Chancery in 2022, where one of its shareholders, Richard Tornetta, argued that Elon Musk’s 2018 compensation plan should be overturned by the court because it was unlawful. the result of sham negotiations between a beholden board and an increasingly assertive CEO.

At the conclusion of the trial in early 2024, Delaware Chancery Chief Justice Kathaleen St. J. McCormick, scrapped Elon Musk’s compensation plan, prompting Elon Musk to declare that Tesla would leave Delaware and re-incorporate in Texas. However, Elon Musk’s lawyers assured the Delaware Chancery Court that they will continue to retain jurisdiction over the issue of Tesla CEO compensation.

To counter the court’s negative ruling, Tesla and Elon Musk chose to re-ratify under section 204 of the Delaware General Corporation Act, which provides for correcting corporate actions that are defective due to “authorization failure.” Most importantly, the regulations do not provide for resolving breaches of fiduciary duty, which was the main reason cited by the court for voiding Musk’s 2018 pay package.

Judge McCormick has ordered @Tesla to pay the lawyers who brought the case $345 million.

— Sawyer Merritt (@SawyerMerritt) December 2, 2024

This brings us to today when Musk’s ill-fated pay package has been halted for the second time. Tesla also had to pay Tornetta’s attorneys $345 million in remuneration.

The judge wrote in his opinion:

“Even if a shareholder vote could have the effect of ratification, that cannot happen here.”

Recall that Elon Musk had previously hinted at leaving Tesla if he failed to get appropriate compensation. Musk has not received a base salary from Tesla since at least 2019.

Oh, and about that “$50 billion payout package”:

The strike price for the 304 million options is $23.33, so @ $357/share, that’s roughly a “$101 billion payout package.”

Oh well, easy come, easy go!$TSLA

— Stanphyl Capital (@StanphylCap) December 2, 2024

It is worth noting that Elon Musk currently owns about 13 percent of Tesla shares, equivalent to about 412 million shares. The Tesla CEO also has about 304 million unexercised stock options as part of a 2018 compensation plan, which entitles the EV giant’s CEO to about 9 percent of Tesla’s 3.2 billion outstanding common shares. These options have now been overturned by the courts.