Elon Musk Loses Top Spot as Forbes’ Richest Billionaire
In a recent turn of events, Elon Musk, the CEO of Tesla Inc, has lost his position as the world’s richest person on Forbes’ list. This follows a decision by a Delaware judge to invalidate a substantial package of performance-based Tesla options that were awarded to Musk back in 2018. These shares were estimated to be worth over $50 billion.
As a result of this ruling, Musk’s net worth has been adjusted by Forbes to $184.5 billion, which places him in second place behind Bernard Arnault, the CEO of LVMH, who has an estimated net worth of $210.8 billion. However, Musk still remains ahead of Jeff Bezos, the founder of Amazon, with a net worth of $179 billion, making him the third richest person in the world.
The Delaware judge, Kathaleen McCormick, determined that Musk and his co-defendants, including Tesla and some of its board members, failed to demonstrate that the process behind the awarding of the options was fair. This was due to conflicts of interest and Musk’s significant control over the board. The options were valued at $50.9 billion and would have been worth $55.8 billion upon full vesting in late 2022, as estimated by Tesla.
Since Musk is now unable to exercise or sell these options following the court’s ruling, Forbes has discounted their value by 50%. This has consequently reduced Musk’s net worth by $25.5 billion. However, there remains a possibility that Tesla could grant him another pay package that undergoes a more rigorous process to comply with legal requirements.
Interestingly, Tesla shareholders, who have seen the company’s stock appreciate more than sevenfold since 2018, have not celebrated the Delaware court’s decision. Musk expressed his desire for additional Tesla shares prior to the ruling, stating in a post on January 15 that he was uncomfortable growing Tesla to be a leader in artificial intelligence and robotics without having about 25% voting control.
If the judge’s decision is upheld on appeal, Musk’s stake in Tesla would drop from 22% to 13%. This development signifies a significant shift in Musk’s position as the world’s richest person, which had been primarily driven by his ownership of Tesla shares. Now, with the voiding of the options package, Musk faces a reevaluation of his net worth and standing among the global billionaire elite.
It remains to be seen how this legal battle will unfold and whether Tesla will introduce a new compensation plan for Musk. As the situation evolves, it will undoubtedly impact Musk’s financial position and the overall rankings of the world’s wealthiest individuals.
