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A Delaware judge on Tuesday voided the $56 billion pay package of Tesla CEO Elon Musk, ruling that the company’s board of directors failed to prove “that the compensation plan was fair.”
Tesla’s share price slid about 3% in after-hours trading Tuesday following news of the decision in the lawsuit filed by Richard Tornetta, a shareholder in the electric automaker.
“The plaintiff is entitled to rescission,” Delaware Chancery Court Judge Kathaleen McCormick wrote in her ruling agreeing that Musk’s pay package was inappropriately set by Tesla’s board.
“The parties are to confer on a form of final order implementing this decision and submit a joint letter identifying all issues, including fees that need to be addressed to bring this matter to a conclusion at the trial level,” McCormick said.
The 2018 CEO pay package that Tesla granted Musk was unparalleled in corporate compensation plan in history, and made the Tesla and SpaceX boss a centi-billionaire and the richest person on the planet.
CNBC has requested comment from Musk, his lawyer and Tornetta’s attorney.
In a tweet late Tuesday afternoon, Musk wrote, “Never incorporate your company in the state of Delaware.”
