A Delaware judge struck down Elon Musk’s record $55B pay package from Tesla, calling it excessively large

Musk, the world’s richest man with a net worth of $251B, became Tesla’s largest shareholder in 2004 and its CEO in 2008

He oversaw its growth into the world’s largest electric vehicle (EV) company, and by 2018, controlled a 22% stake in it

That year, he negotiated a pay package worth up to $55B, the largest such compensation package ever

That package was split into 12 separate grants, though, each of which was tied to a different performance goal, meaning his compensation was directly tied to the company’s performance

Since 2018, Tesla has become the world’s most valuable automaker with a market cap over three times higher than the next-largest

Musk ultimately hit all 12 performance targets tied to his compensation package, which many analysts had not expected him to do

Musk was therefore entitled to purchase 303M Tesla shares, or roughly 10% of the company

Some investors sued, though, arguing that Musk’s compensation package – “over 33 times larger than the plan’s closest comparison,” a court said – was excessively large

On Tuesday, a Delaware judge agreed with that and struck down Musk’s pay package

Calling the process that led to the package “deeply flawed,” she said Musk had leveraged his control over Tesla’s board to secure “unfair” compensation, hurting other Tesla shareholders

The ruling, which Musk could appeal, sets a new precedent against excessively large pay packages for company executives, legal analysts said

It also threatens Musk’s status as the world’s richest man and disrupts his stated plan of one day controlling 25% of Tesla

“Never incorporate your company in the state of Delaware,” Musk said on X after the ruling

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