Elon Musk’s $56 Billion Tesla Pay Package Denied by Judge

A Delaware judge voided Elon Musk‘s $56 billion pay package at Tesla on Tuesday, after a shareholder sued Musk claiming the approval process for the package was improper.

The 2018 compensation package entitled the billionaire to stock options as Tesla hit performance benchmarks — the loss of them would drop Musk’s net worth to $154.3 billion, according to the Bloomberg Billionaires Index, and may force the world’s richest person to relinquish his title for third place.

In a 201-page opinion, Delaware Chancery Court Chief Judge Kathaleen St. J. McCormick called the package an “unfathomable sum” that was unfair and excessive.

“Swept up by the rhetoric of ‘all upside,’ or perhaps starry eyed by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?,” Delaware Chancery Court Chief Judge Kathaleen St. J. McCormick wrote, siding with shareholder Richard Tornetta who alleged Tesla directors didn’t set sufficient disclosures about the compensation package and the performance targets required of Musk.

McCormick also agreed with Tornetta’s claim that Musk “controlled Tesla,” and said the process leading to the board’s approval of his compensation was “deeply flawed.” The CEO had “extensive ties with the persons tasked with negotiating on Tesla’s behalf,” wrote the judge, including “management members who were beholden to Musk” — such as General Counsel Todd Maron, Musk’s “former divorce attorney.”

The electric car company’s share price dipped about 3 percent in after-hours trading, per Bloomberg.

“The parties are to confer on a form of final order implementing this decision and submit a joint letter identifying all issues, including fees, that need to be addressed to bring this matter to a conclusion,” McCormick wrote.

More than five years after the Tesla co-founder was granted the “biggest compensation plan ever,” the ruling Tuesday means the electric car company’s board will have to start from scratch and offer a new proposal.


Following the ruling, Musk took to his social media platform X (formerly Twitter) to bemoan the judge’s decision. “Never incorporate your company in the state of Delaware,” wrote the Tesla CEO.

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