A Delaware judge has ruled against Tesla CEO Elon Musk in a lawsuit challenging his shareholder-approved compensation package, ordering the company to pay $345 million in legal fees. The ruling, by Chancellor Kathaleen St. Jude McCormick, has drawn criticism for its exorbitant payout of $18,000 per hour to the plaintiff’s attorneys.
The case stemmed from a complaint by a shareholder with just nine shares of Tesla, who challenged the compensation package approved by 77% of shareholders in June 2024. McCormick overturned the package, claiming shareholders were not properly informed when voting and that Tesla’s board lacked independence.
Tesla called the ruling “wrong” and pledged to appeal. “This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners — the shareholders,” Tesla wrote on X.
The decision has raised questions about McCormick’s connections to President Joe Biden. Before her 2021 appointment to the Delaware Chancery Court, McCormick worked for Young Conaway, a firm that donated heavily to Biden’s campaigns. Emails from Hunter Biden’s laptop suggest the Biden family’s influence extended to Delaware judicial appointments.
The legal battle comes amid mounting pressure on Musk from the Biden administration. Musk has faced investigations by the Department of Justice and FCC actions targeting his companies, including SpaceX’s Starlink. Critics allege the administration is using legal tools to stifle Musk’s influence as a dissenting voice.
The ruling adds to a broader debate about the politicization of the judiciary and shareholder rights. Tesla’s appeal will test whether courts can override supermajority decisions by shareholders in favor of punitive legal fees.
