Tesla will get Elon Musk his pay package 'one way or another': analyst
12/03/2024 01:20 PM
Tesla CEO Elon Musk will get his $56 billion pay package from the company “one way or another” after Delaware Chancery Court Chancellor Kathaleen McCormick denied the massive compensation for a second time on Monday night.
This is according to Wedbush analyst Dan Ives, who said the move to deny the package was just the latest example of a “Twilight Zone legal move” from McCormick.
On Monday night, Chancellor McCormick defied the wishes of 72 percent of the Tesla shareholders who voted for the second time to give Musk his pay package, which was earned through tranches and was approved back in 2018, and denied the money being moved to the CEO.
McCormick acknowledged the Shareholder vote, which occurred this past summer but said that it was an attempt at "flipping the outcome of an adverse post-trial decision based on evidence they created after trial.”
Musk said the ruling was “absolute corruption.”
Ives said in a note to investors this morning that this is the latest chapter in the saga, which will result in an appeal:
“Judge McCormick initially voided this flagship pay package for Musk in the Delaware courts which was a shocker and this ultimately catalyzed Tesla to move their HQ and operating status from Delaware to Texas. This is just the latest round in this UFC battle between Tesla and the Delaware Courts with much more action ahead on the appeals process.”
However, Ives believes Tesla’s pushback is going to be precise and persistent and thinks it could quite possibly make it to the Supreme Court:
“We continue to believe Tesla and Musk will fight this tooth and nail all the way to the Supreme Court in Delaware and then potentially to the Federal system as this remains a frustrating headache for Tesla, Musk, and its shareholders. We also believe this case could be the catalyst for more public companies to leave the state of Delaware for their corporation status as the legal precedents set in this Tesla/ Musk case is very eye opening to public Boards around the country and go against shareholders vote in a dangerous precedent in our view.”
Shares are down just over two percent at 12:30 p.m. on the East Coast.
Tesla CEO Elon Musk denied $56bn pay package once again by Delaware judge
Ives said his firm will maintain the ‘Outperform’ rating and a $400 price target on shares. He thinks the saga is far from over, stating Tesla will get Musk his pay package “one way or another“:
“Musk is Tesla and Tesla is Musk. One way or another the Board is getting Musk his pay package (and another long term one for the next decade) to secure Musk will be CEO of Tesla at least through 2030. The Delaware Court battle has become a soap opera and we expect Tesla will ultimately win this fight at the Supreme Court level given shareholders have approved this pay package twice in an overwhelming matter.”
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