His fortune, estimated at $212 billion, allows him to earn more than $725 per second.
But Elon Musk, the whimsical billionaire at the head of Tesla or Space X, will have to sit on a jackpot of 56 billion dollars.
A Delaware judge has indeed ruled in favor of a Tesla shareholder who requested the cancellation of the gigantic compensation plan granted in 2018 to the boss of the electric vehicle manufacturer.
Deprived of this sum, Elon Musk's fortune could fall to $156 billion, which would demote him to third place in the ranking of the richest men in the world behind
Bernard Arnault, the boss of LVMH and owner of Le Parisien and Jeff Bezos, according to the Forbes ranking.
“The judgment is in favor of the plaintiff,” concluded Judge Kathaleen McCormick in her 200-page decision.
The parties must now “discuss among themselves to implement this judgment,” added the judge.
“Was the richest man in the world overpaid?”
", begins the judge's decision, emphasizing that the plan represented 250 times the average remuneration of Elon Musk's peers.
The one she nicknamed the “Superstar CEO” held 21.9% of Tesla’s capital at the time but was the one who really had control, according to the document.
The judge considered that the shareholders received “erroneous” and “misleading” information about the board of directors and the remuneration committee (several members of which had been close to the billionaire for 15 to 20 years) ahead of the general meeting during which the plan was approved.
A plan which planned to give Elon Musk Tesla shares based on the achievement of several objectives over ten years.
One of these conditions, for example, was that Tesla's market capitalization reached $650 billion.
In 2021, capitalization had briefly reached $1,000 billion.
Today it is also close to 610 billion dollars.
An “emblematic” affair
During the hearings, Elon Musk recalled that at the time “the probability of survival of the group was extremely low” emphasizing that the manufacturer was very close to bankruptcy in 2018.
He added that he had not participated in the development of the plan, although documents shown in court suggested that he had discussed it with members of the board of directors and with executives.
The law firm representing lead plaintiff Richard Tornetta and other shareholders was pleased in a statement to have won a “landmark” compensation case.
The judge "determined that Tesla's board of directors failed in its fiduciary duty by structuring Elon Musk's compensation in installments and, therefore, she ordered that the package as a whole be canceled," noted the Bernstein, Litowitz, Berger & Grossman firm.
“We are extremely grateful for the court's careful and extremely well-reasoned decision to overturn Tesla's ridiculously oversized compensation plan,” added Greg Varallo, one of the lead lawyers for the plaintiffs, saying that this decision will benefit “investors of Tesla, who will see the dilution generated by this gargantuan plan be erased.”
Never incorporate your company in the state of Delaware
— Elon Musk (@elonmusk) January 30, 2024
Elon Musk can appeal this judgment, or concoct a new compensation plan.
In the meantime, Tesla shares lost 2.89% in electronic trading after the close of the New York Stock Exchange.
True to form, Elon Musk reacted in a message posted on his X network: “Never set up the headquarters of your company in the state of Delaware.”