Fallout of Musk’s Tesla pay defeat: Investors gain tools, CEO pay benchmark nullified - Jeroen van Kwawegen

In a landmark ruling, a Delaware court cancelled Elon Musk’s $56 billion Tesla compensation package from Tesla following a lawsuit by a shareholder who argued that Musk’s pay package was excessive - an argument that found favour with the judge. These implications of the court case are far-reaching for companies with outside compensation packages and corporate boards accused of lax oversight. In an interview with Biznews, Jeroen van Kwawegen, the co-lead of the New York law firm Bernstein, Litowitz, Berger and Grossman who was responsible for the exceptional result said that the court case proved that the richest person on earth is not above the law, especially in the United States. Van Kwawegen said it also showed that investors have multiple tools in their toolbox to make sure that executives and the directors of their portfolio companies comply with their fiduciary duties. On the impact that the court case against Musk’s Tesla compensation would have on the pay packages of other CEOs, he said the Musk benchmark for chief executives salaries has been nullified and that it will have a direct impact on future compensation packages. He also addressed Musk’s recent poll on X (formerly Twitter) poll that Musk had on his social media platform about relocating Tesla from Delaware stating that such a decision lies with the board and shareholder, not Musk alone. Superstar CEOs, the shareholder attorney said, still have fiduciary accountability. Van Kwawegen also set out that the legal options that are open to Musk should he consider appealing the court’s decision to strip him of his Tesla compensation package.