Title: Delaware Judge Strikes Down Musk’s $55B Pay Package at Tesla, Putting His Title as Richest Man at Risk
In a surprising court ruling, a Delaware judge has decided that Elon Musk must relinquish the largest pay package in corporate history, putting the CEO’s future fortune in jeopardy. The judge, Kathleen McCormick, found that the $55 billion awarded to Musk five years ago was a result of him exerting undue influence on the Tesla board of directors.
McCormick ruled that the process leading to the approval of Musk’s 2018 compensation package was deeply flawed due to his close personal relationships with some board members. Her verdict has potentially significant consequences for Musk, as it could affect his position as the world’s richest person.
Currently, Musk holds the top spot on the Forbes Real-Time Billionaires List with a net worth of $210.6 billion. However, with the court’s ruling, his ranking may be in jeopardy. Bernard Arnault, who trails just $2 billion behind Musk, stands to benefit from this decision and could overtake him as the richest man in the world.
Musk’s stock options from the compensation plan constituted a significant portion of his net worth, valued at least $51.1 billion. Without this package, his fortune would drop to $154.3 billion, pushing him down to the third-richest person, behind Arnault and Jeff Bezos.
Arnault, a 73-year-old French businessman and investor, currently sits in the second position. He is the founder, chairman, and CEO of LVMH, the world’s largest luxury goods company. The conglomerate oversees prestigious brands such as Louis Vuitton, Dior, Hennessy, and Moet et Chandon, among others.
Musk didn’t hide his frustration following the judge’s ruling. Taking to his social media platform, X, formerly Twitter, he expressed his disapproval, stating, Never incorporate your company in the state of Delaware. He also recommended incorporating in Nevada or Texas if shareholders’ decisions were preferred.
Mixed opinions emerged among users on X regarding the court ruling. Some questioned the judge’s authority to interfere with a company’s payment decisions, while others brought up the topic of tax avoidance, accusing Musk of incorporating in Delaware to avoid corporate taxes.
Judge McCormick’s ruling highlighted Musk’s extensive ties with individuals involved in negotiating on Tesla’s behalf, including General Counsel Todd Maron, who had previously served as Musk’s divorce attorney. Defense lawyers argued that the pay plan was fairly negotiated by an independent committee of directors and had been approved by shareholders, even though this approval was not mandatory.
In light of the ruling, McCormick ordered the directors to reconvene and devise an appropriate pay package for the world’s richest man.
This court decision places Musk’s future fortune and position as the richest man in jeopardy. As the parties work toward a resolution, the outcome remains uncertain. Musk’s bid to secure a quarter of Tesla’s voting stock further underscores his desire to retain influence over the company’s strategic direction.
Following the ruling, Tesla’s shares experienced a decline of approximately 3 percent, reflecting the potential impact on the company’s future and Musk’s wealth.
The outcome of this legal battle could have far-reaching consequences, not only for Musk but also for the dynamics at the top of the world’s rich list. As Musk awaits the final resolution, the stakes couldn’t be higher, with his spot as the wealthiest person hanging in the balance.
