Musk’s place at top of rich list in jeopardy as judge disallows his £44bn pay packet
ELON MUSK risks losing his spot as the world’s richest man after a judge in the United States ruled that the billionaire’s “unfathomable” $56bn (£44bn) Tesla pay package is unlawful.
During a Delaware court ruling on Tuesday, Judge Kathaleen Mccormick said the pay package, awarded in 2018, did not meet the standard of a “fair price”. In her ruling, Ms Mccormick wrote: “The incredible size of the biggest compensation plan ever – an unfathomable sum – seems to have been calibrated to help Musk achieve what he believed would make ‘a good future for humanity’.”
The judgment can be appealed to Delaware’s supreme court but, if upheld, Mr Musk would drop two places in the world’s richest rankings, below Bernard Arnault, owner of luxury giant LVMH, and Jeff Bezos, the Amazon founder. It will leave Mr Musk on a net worth around $155bn.
Mr Musk’s pay award from Tesla is by far the largest ever for any executive. Directors at the electric vehicle company had defended the deal. Antonio Gracias, a former Tesla director, said it was “a great deal for shareholders”.
It also granted Mr Musk the right to buy batches of Tesla stock at a steep discount if financial targets were met. However, one Tesla shareholder, Richard Tornetta, challenged the deal. His lawyers argued Mr Musk’s goals were easier to achieve than the board had said. He also claimed company forecasts showed Mr Musk would quickly qualify for a large part of the award and his legal team added that Mr Musk should have been working full time at Tesla, rather than splitting time with Spacex and other ventures.
They also argued that the Tesla board had a duty to offer a less lucrative deal or seek another chief executive.
Mr Musk lashed out at the ruling on social media and threatened to move Tesla’s legal incorporation out of the state. “Never incorporate your company in the state of Delaware,” he said. “I recommend incorporating in Nevada or Texas if you prefer shareholders to decide matters.”
Tesla’s shares fell by 2pc in afterhours trading after the ruling which is likely to generate fresh intrigue around Tesla’s next set of pay talks. Mr Musk has said he wants at least 25pc voting control over Tesla to put off potential activist shareholders – the billionaire currently owns 13pc of the company.
Amit Batish of Equilar, an executive pay research firm, estimated in 2022 that Mr Musk’s package was around six times larger than the combined pay of the 200 highest-paid executives in 2021. Mr Musk was approached for comment.