In a decisive ruling, a judge in the state of Delaware has nullified the $55.8 billion (£44 billion) pay deal granted to Elon Musk by electric car company Tesla in 2018.
The legal challenge was initiated by a shareholder who contended that the compensation was an excessive payout.
Judge Kathaleen McCormick concluded that Tesla directors, who negotiated the pay package, may have been influenced by Mr. Musk’s “superstar appeal” and failed to adequately inform shareholders. She characterized the deal as “unfathomable” and ordered its cancellation.
The invalidated pay deal, the largest in US corporate history, played a pivotal role in elevating Elon Musk to the status of the world’s wealthiest individual. Bloomberg and Forbes estimated his net worth to range between $198 billion (£162 billion) and $220 billion (£180 billion) as of November 2023.
Elon Musk’s compensation from Tesla was linked to performance targets, including the company’s share price and profitability, with no conventional salary involved.
The legal challenge was spearheaded by Tesla shareholder Richard Tornetta, who, despite owning only nine Tesla shares, took legal action to rescind the award. Tornetta argued that shareholders were not sufficiently informed about the attainability of Musk’s performance goals.
