Elon Musk's $56 billion Tesla pay package struck down again, Delaware Judge says board ‘improperly influenced…’

A US district judge has rejected Tesla chief Elon Musk's extravagant $56 billion pay package for a second time, according to a Bloomberg report. This comes despite shareholder support for the billionaire's salary claim, but the judge noted that the EV automaker's board was “improperly influenced” into accepting the payout.

It added that Delaware Chancery Court Judge Kathaleen St. J. McCormick made the ruling on December 2, making it the second time that she has ruled against the same excessive pay package for Musk. She first struck it down in January.

Struck Down. Again.

Musk’s record-setting pay was struck down once again by the same judge and could possibly strip the world's richest man's net worth of billions of dollars, the report noted.

Judge McCormick stuck to her original ruling and said that Musk improperly influenced Tesla’s board when it adopted the billionaire’s plan in 2018.

“There were undoubtedly a range of healthy amounts that the board could have decided to pay Musk. Instead, the board capitulated to Musk’s terms,” McCormick wrote in her 101-page decision.

Richest Man Still

While the ruling rejects the highest-ever pay arrangement for a US corporate executive, and it could impact the 53-year-old’s wealth, he still remains the world’s richest person. His top spot is unaffected as Tesla’s stock continues to soar as investors heavily bet on the tech mogul’s close relationship with US President-elect Donald Trump.

Musk’s wealth hit an all-time high last month — surpassing the previous record of $340.4 billion set in November 2021 — thanks to a Tesla stock rally following the presidential election and a new funding round for his artificial intelligence startup.

The stock options package was initially worth $2.6 billion and spiked to $56 billion by the time the judge cancelled it. At Monday’s closing price, it was worth $101.5 billion. Tesla shares fell following the ruling in after-hours trading in New York.

Appeals Argument

If it stands, McCormick’s decision effectively means Tesla’s board would have to develop a new proposal. However, Tesla has asserted that it would appeal the decision to the Delaware Supreme Court. That process could take months.

Musk also reacted on his social media platform X (formerly known as Twitter), saying: “absolute corruption”.

(With inputs from Bloomberg)