A Delaware state court judge has struck down Elon Musk’s $55 billion Tesla CEO pay package from 2018 that cemented his place as the world’s richest person.
In a ruling Tuesday in Delaware Chancery Court, Judge Kathaleen McCormick found that defendants in a lawsuit, which include Musk and Tesla’s board, failed to meet the burden in proving that“the compensation plan was fair.”
The 2018 CEO compensation plan, the largest in history, was valued at up to $55.8 billion dollars. But a shareholder, Richard J. Tornetta, filed a lawsuit in June of that year arguing that Musk had used his influence on the board to secure the compensation plan. During the civil trial, Tornetta’s lawyers suggested that Musk planned to use the pay package to fund his Mars colonization ambitions.
Musk testified in court in 2022 that he had no role in setting the plan’s terms, and that he did not attend board meetings where the plan was discussed, the Associated Press reported at the time.
McCormick ruled Tuesday that the “process leading to the approval of Musk’s compensation plan was deeply flawed.”
Tesla did not immediately respond to a request for comment late Tuesday.
Tesla stock, which has lost billions in market value to start 2024, were down 3% in after-hours trading following the news. The stock has been a rare tech stinker as shares in the other leading tech companies have otherwise risen to start the year.
Musk said earlier this month that he wants more control over Tesla — and suggested he’d build AI and robotics products elsewhere if he doesn’t get it.
“I am uncomfortable growing Tesla to be a leader in AI & robotics without having ~25% voting control,” he said on X. “Enough to be influential, but not so much that I can’t be overturned. Unless that is the case, I would prefer to build products outside of Tesla.”