Elon Musk: Court stops his $56 billion bonus!

Elon Musk: Court stops his $56 billion bonus!

On December 3, 2024, Elon Musk suffered a significant defeat in a court case that severely jeopardized his ambitious bonus numbers for his role at Tesla. A US court presided over by Judge Kathaleen McCormick rejected Musk's demand for a sizable $56 billion bonus. This decision is the result of an outstanding legal dispute, probably starting from a similar ruling from January 2024, in which McCormick had already pointed out the "disproportionately high" compensation and criticized Musk's strong influence on Tesla management.

The original bonus was $2.6 billion and due to Tesla's soaring stock price, it exploded to a massive sum that could even exceed $100 billion based on current market conditions. Despite the support of Tesla shareholders who approved the bonus package in June this year, the judge ruled that the set performance targets were too easily achievable for Musk and did not reflect that Musk also serves as part-time head of SpaceX and X (formerly Twitter). ORF reported, shareholders were inadequately informed about Musk's influence on the compensation process and this jeopardized the quality of their decisions.

Appeal and possible consequences

Disappointed by the verdict, Tesla has already announced that it will appeal. However, this decision could take over a year. In addition, the legal situation could become even more complicated, as Musk's influence and the internal entanglements within the company could reignite discussions about the appropriateness of executive compensation. Shareholder Richard Tornetta, who filed the lawsuit, criticized Musk's goals for not being ambitious enough and therefore justifying excessive compensation. The dispute between Tesla and Musk is expected to move to further legal scrutiny, perhaps even in Texas, where the company is now headquartered. The Express reported, that Tesla faces an uncertain financial future, while its shares' performance could also rebound from an initial two percent decline in after-hours trading.