Investing.com– Tesla Inc (NASDAQ:) shares dropped in extended trading on Monday after a Delaware court reaffirmed its decision to invalidate Elon Musk’s landmark compensation package.
The court ruled that the Tesla CEO is not entitled to his $56 billion compensation package, despite Tesla shareholders voting to reinstate it.
The ruling deemed the 2018 pay plan excessive, stating it was far beyond comparable corporate compensation standards. The package, tied to ambitious company performance goals, would have granted Musk significant stock options.
Shares fell 1.3% to $352.36 in after-hours trade, following the ruling. Tesla said it will appeal the decision, Bloomberg reported.
The ruling by Chancellor Kathaleen McCormick of the Delaware Court of Chancery is a reaffirmation of her January decision that declared Musk’s $56 billion compensation package excessive and voided it.
Analysts predict the Tesla board may draft a revised pay plan, potentially aligning Musk’s goals with shareholder priorities.
The company has been grappling with weakening demand and heightened competition from local players amid regulatory woes. Tesla had sparked a price war in EV markets over the past two years, severely denting margins across the sector.
Still, Tesla is expected to potentially benefit from Musk’s increasing influence in Washington, given his involvement with President-elect Donald Trump. Analysts expect easier regulatory channels for the company’s full self-driving and robotaxi ambitions.
