UpdateA US judge has rejected a $55 billion pay package for Tesla CEO Elon Musk. As a result, the size of the wealth of the richest man in the world has suddenly become uncertain. Without the package, his wealth would drop to more than $154 billion, making him the third-richest person on earth.
The wealthy businessman was promised the package from Tesla years ago. It was the largest remuneration package ever for a company director. But one shareholder described the mega reward as excessive. A judge in Delaware agreed with that reasoning.
This does not concern a reward that Musk received in cash. Instead, he was promised stock options if he could achieve certain goals with Tesla. The fact that the amount is so high is because Tesla’s stock price has risen considerably over the years.
Richard Tornetta, a small investor in Tesla, thought the bonus was unfair and filed a lawsuit in 2018. At that time there was immediately a lot of speculation that Tesla’s stock price could rise to great heights. Tornetta also thought it was unfair that Musk was allocated the reward from a board that was actually completely under his control. For example, one of the directors involved was his brother Kimbal Musk.
Not simple
Yet the matter is not that simple. Lawyers for Musk have previously pointed out that the proposal was overwhelmingly adopted by Tesla shareholders. The bonus would have made Musk focused on making Tesla better. And this could be due to the fact that the stock price has risen so rapidly, which is in the interest of all shareholders.
“Never locate a branch of your company in the state of Delaware,” Musk tweeted after the verdict. The ruling can still be appealed.
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