ALBAWABA – Elon Musk’s estimated $210 billion net worth is at risk of taking a big hit after a ruling by a Delaware state judge to void his $55 billion compensation package from Tesla, which received a green light in 2022 after shareholders approved it in 2018, the assets from the compensation make up a large chunk of Musk’s fortune, with it overturned, it could approximately drop his net worth to less than $155 billion.
In response to a lawsuit brought by investor Richard Tornetta, in which his attorney Greg Varallo made a statement that shareholders were misled and unaware that the biggest corporate compensation deal ever was actually suggested by Musk himself, Judge Kathaleen McCormick said that the defendants failed to provide evidence that the shareholder vote was properly informed, considering Varallo’s argument a “kill-shot” as reported by Reuters, thus voiding the agreement.
Judge McCormick added that the shareholders decision was a result of the company’s desperate need for Musk to support their growth, which in turn motivated Musk to develop the company to reach over $600 billion is value, however, does not justify such an unprecedented compensation deal.
Elon Musk on Tesla compensation
— Internal Tech Emails (@TechEmails) January 30, 2024
July 30, 2017 pic.twitter.com/Pl0lhCyypz
The court decision, which according to Bloomberg is his first major loss in a legal battle, did not land lightly on Musk, who took to his platform X (previously Twitter) to express his displeasure saying “Never incorporate your company in the state of Delaware”, adding suggestion for other business owners who want control with shareholders to incorporate their companies in Texas or Nevada.
It is still unclear whether Musk plans to appeal the court decision or ask Tesla, which shares dropped 3 percent in price after the ruling, to go back to the drawing board for a new deal, especially after mentioning earlier his desire to have more shares at the company to improve his voting strength, despite Judge McCormick saying “Musk wielded the maximum influence that a manager can wield over a company”.
