- A Delaware judge voided the $56 billion compensation package of Tesla CEO Elon Musk.
- The plan was the largest-ever compensation package in corporate history.
- Tesla’s share price slid about 3% in after-hours trading following news of the decision.
- “The plaintiff is entitled to rescission,” Delaware Chancery Court Judge Kathaleen McCormick wrote in her ruling agreeing that Musk’s pay package was inappropriately set by Tesla’s board.
A Delaware judge on Tuesday voided the $56 billion pay package of Tesla
CEO Elon Musk, ruling that the company’s board of directors failed to prove “that the compensation plan was fair.”
Tesla’s share price slid about 3% in after-hours trading Tuesday following news of the decision in the Delaware Chancery Court lawsuit filed by Richard Tornetta, a shareholder in the electric automaker.
The pay package that Tesla granted Musk in 2018 was the largest compensation plan in public corporate history, the judge noted, making the Tesla and SpaceX boss a centi-billionaire and the richest person on the planet.
The plan offered Musk the chance to secure 12 tranches of Tesla stock options, which would vest if the company’s market capitalization increased by $50 billion and Tesla achieved a revenue target.
“Was the richest person in the world overpaid?” asked Chancery Court Judge Kathaleen McCormick in her 200-page ruling. “The stockholder plaintiff in this derivative lawsuit says so. He claims that Tesla, Inc.’s directors breached their fiduciary duties by awarding Elon Musk a performance-based equity-compensation plan.”