Judge blocks Elon Musk pay package

Elon Musk's $55.8 billion Tesla payout is at risk after a judge ruled it unfair, potentially reducing his net worth.

Elon Musk's net worth may take a hit following a judge's decision that he cannot retain his $55.8 billion Tesla payout. The Delaware Chancery Court judge, Kathaleen McCormick, ruled in favor of Tesla shareholder Richard Tornetta, who sued Musk for receiving a substantial sum and for being too involved with the compensation committee.

The board of directors of the electric vehicle company approved the compensation in 2018, and it was subsequently green-lit in 2022. This payout constitutes a significant portion of Musk's net worth, which could decrease from $210 billion to $155 billion.

Judge McCormick criticized the board for not questioning whether the $55.8 billion compensation plan was necessary for Tesla to retain Musk and achieve its objectives. She highlighted that many of those involved in the decision were not independent of Musk, including Todd Maron, who served as Musk's divorce attorney and the general counsel. The judge found that Musk had received an "unfair" amount driven by himself and insisted that the only remedy would be for him to have his $55.8 million recalled.

In response to the ruling, Musk took to his micro-blogging site X to advise against incorporating a company in the state of Delaware and asked his 170.6 million followers if he should change Tesla's state of incorporation to Texas.

This ruling could potentially have a significant impact on Musk's net worth and raises questions about the fairness of the compensation process at Tesla. It also highlights the importance of independent oversight and decision-making in corporate governance to ensure fair and equitable outcomes for all stakeholders.