Home Estate Planning Musk’s ‘unfathomable’ $56bn Tesla pay package overruled by US judge

Musk’s ‘unfathomable’ $56bn Tesla pay package overruled by US judge

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A Delaware judge has ruled in favour of investors who contested Elon Musk’s $56bn (£44.2bn) Tesla pay package, deeming it excessive, according to a court filing on Tuesday. 

The judge found Tesla’s board inappropriately set Musk’s compensation, which she described as “an unfathomable sum” , and struck down the package.

If the decision stands post-appeal, Tesla’s board will need to devise a new compensation plan for Musk, who is the world’s richest man.

The ruling comes five years after a lawsuit was filed by Tesla shareholder Richard Tornetta, alleging Musk ruled on his own pay negotiations and that the board lacked independence.

“Never incorporate your company in the state of Delaware,” Musk responded in a post on X.

The Tesla tycoon had said he was planning to use his pay package – the largest lump ever for an executive – to fund interplanetary travel.


— Elon Musk (@elonmusk) January 31, 2024

“It’s a way to get humanity to Mars,” he testified on trial in November 2022.

The package grants Musk stock option awards at great discounts as financial and operational goals are met, as long as he holds the stock for five years. 

The judge said the defense was unable to establish that the “historically unprecedented compensation plan” was necessary to ensure Musk remained dedicated to Tesla.

Company directors had argued the Tesla boss’s package meant he was dedicated to the electric vehicle manufacturer. 

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