A judge in the United States’ Delaware state has annulled Elon Musk’s Tesla pay package, valued at $55.8 billion, after ruling that the business tycoon and his lawyers were unable to prove “that the shareholders were fully informed.”
The compensation package, which helped Musk become one of the richest persons in the world, is the highest in corporate history, People reported.
The South African-American business tycoon was granted the pay package in 2018. Delaware Chancery Court Judge Kathaleen St J McCormick wrote in a 200-page ruling that it was the “largest potential compensation opportunity ever observed in public markets by multiple orders of magnitude.”
The judge further ruled that the Tesla board’s approval of the pay package was “deeply flawed.”
The lawsuit was filed by Tesla shareholder Richard Tornetta, who argued that Tesla’s board of directors “breached their fiduciary duties by awarding Elon Musk a performance-based equity compensation plan.”
In addition, McCormick said, “In addition to his 21.9% equity stake, Musk was the paradigmatic ‘Superstar CEO,’ who held some of the most influential corporate positions (CEO, Chair, and founder), enjoyed thick ties with the directors tasked with negotiating on behalf of Tesla and dominated the process that led to board approval of his compensation plan.”
McCormick wrote in her ruling that Musk’s pay package “arrived at an unfair price,” adding that the “plaintiff is entitled to rescission.”