Musk under pressure: lawsuit could cost Tesla shareholders 100 billion!

Musk under pressure: lawsuit could cost Tesla shareholders 100 billion!

Elon Musk is currently facing significant legal challenges. A lawsuit from a small shareholder could cost him Tesla shares worth about $100 billion. A Delaware court recently ruled that Musk was not entitled to the money from a controversial compensation package. These developments follow allegations regarding his influence over compensation in 2018, when the company was negotiating the terms of the package.

In 2018, Musk was approved for a compensation package that would allow him to acquire around 300 million shares at a set price if Tesla met certain goals within ten years. The company's performance, which hit targets faster than expected, means the package is now worth over $100 billion. This set the stage for the current legal disputes, which resulted in a legal defeat for Musk.

Legal changes and their effects

After a lawsuit from a small shareholder who only owned nine Tesla shares, the company changed its articles of association. Now only shareholders with a stake of at least three percent are allowed to file lawsuits against managers or board members. This decision takes advantage of a change in the law in Texas, where Tesla is now based. The new rule means shareholders must hold at least 97 million shares worth about $34 billion to take legal action.

This represented a strategic move to reduce the number of possible lawsuits against the company. The small shareholder filed the lawsuit at Tesla's former headquarters in Delaware, which influenced the court's subsequent decision. A judge ruled in early 2024 that Musk's influence on compensation negotiations was unacceptable. Despite the approval of the compensation package by Tesla shareholders in June 2024, the initial situation in court remains tense.

Shareholder interests and stock market development

The judge upheld an earlier ruling that Musk had too close a relationship with board members who were also involved in negotiating compensation. This close involvement led to a violation of transparency obligations because shareholders were not informed about these contacts before the first vote. The latest developments show that Tesla can appeal the court decision.

Overall, the mood among investors remains tense, even though Tesla's share price has risen significantly since the beginning of the year. The price is currently around $349, after trading below $200 at the beginning of the year. Investors are increasingly betting on the company's positive prospects, especially in connection with Tesla's plans for self-driving vehicles, which could be favored by government frameworks. Tesla's market value has already exceeded the $1.1 trillion mark, while the failed legal dispute over Musk's compensation package continues to cause a stir.

In view of these developments, it remains to be seen how the legal and economic framework for Elon Musk and Tesla will develop. Creating new legal hurdles for shareholders could impact future lawsuits and impact the company in the long term.

Full information on Musk's compensation package and legal disputes can be found at South Germans and daily news.