Musk Is on The Verge Of Throwing Out 74 Trillion Won In Stocks

The recently raised ‘management risk’ surrounding Tesla CEO Elon Musk began with a court ruling. Musk is on the verge of throwing out 74 trillion won in stocks. In a trial held in the U.S. State of Delaware on January 31, a minority shareholder with 9 shares of Tesla stock won a lawsuit filed against Tesla’s board of directors. This minority shareholder filed a lawsuit, claiming that he did not know why Tesla’s board of directors was paying Musk such a huge compensation package and that it was invalid.

The compensation plan in question was passed at the 2018 Tesla shareholder meeting. Each time Musk achieved one of 12 goals, including market capitalization and sales, he received about 1% of Tesla stock, allowing him to receive stock options of up to 110 million shares. Musk, who achieved all of his 2022 goals, received stock worth about $55.8 billion.

However, the minority shareholder who filed the lawsuit claimed that Musk had put pressure on the board of directors, calling the amount “an unprecedentedly high amount,” and left the decision to the court in October 2022. And on January 31, the Delaware State Court ruled in favor of the plaintiff, saying, “Tesla failed to prove why it paid such compensation to Musk.”

Judge Catherine McCormick pointed out that “there were serious flaws in the board’s process of approving Musk’s compensation package.” Considering that Musk’s younger brother and acquaintances were on Tesla’s board of directors, she believed that Musk was in fact controlling the board of directors, and therefore ruled that the compensation package approved in this way was invalid.

Musk Is On The Verge Of Losing 100 Trillion Won Due To A Bad Relationship With A Judge.

After losing this lawsuit, Musk is on the verge of losing 55.8 billion dollars (about 74.3814 trillion won) worth of Tesla stock. Immediately after the ruling, Musk expressed his dissatisfaction on his social media platform Because of Delaware’s pro-business laws and tax system, more than half of listed U.S. companies make it their corporate headquarters.

Tesla’s stock price fell slightly after the Delaware court’s decision. In 2024, the U.S. stock market entered an upward phase, but Tesla stock prices went in reverse and fell by about 25%. However, paradoxically, this ruling could be good news for Tesla shareholders. Eric Talley, a professor at Columbia Law School, said, “If the court ruling is upheld, the number of shares issued may decrease, which could increase the value of Tesla stock for investors.”

With this ruling, the bad relationship between CEO Musk and Judge McCormick is being reexamined. In April 2022, Musk agreed to acquire Twitter for $44 billion, but unilaterally canceled the acquisition agreement three months later in July. The reason for the destruction I heard at the time was that Twitter did not provide information about the fake account. Naturally, Twitter filed a contract enforcement lawsuit, and the person in charge of the case was Judge McCormick. He ruled that Musk should fulfill his contract with Twitter on October 26, 2022.

Musk attempted to change his Twitter name by changing his name to X, but the corporate value of this social media service is falling. It is known that compared to when Musk took over, it has increased by more than half. Based on the value of $44 billion in 2022, it amounts to a loss of at least 30 trillion won. Including this ruling, Musk is in danger of losing approximately 100 trillion won due to Judge McCormick’s ruling.

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