Cancellation of Tesla CEO's compensation package will prevent Elon Musk from becoming the richest man in the world
A court in Delaware overturned a large compensation package for the CEO of Tesla after an appeal from investors. This decision, if confirmed, could seriously affect Elon Musk and reduce his wealth, moving him to third place among the richest people on the planet, The Verge reports.
Cancellation of the compensation package: consequences for Elon Musk
Approval of the compensation package
In 2018, Tesla shareholders approved the compensation package, who encouraged Musk to achieve the company's key development goals. One of those goals was a market valuation of $650 billion, which was ten times the company's value at the time.
However, Judge Kathleen McCormick overturned this package, citing the fact that such a huge compensation does not meet normal market standards. The judge believes that the court relied on too close relationships between board members and Musk, which could have influenced the decision.
Court decision indicates that Tesla's board of directors consisted of many individuals who had close relationships with Musk. Some of them had significant investments in Musk's companies, others were his friends or close relatives.
- Antonio Gracias, Musk's friend and investor in Musk's companies since the days of PayPal.
- James Murdoch, Musk's close friend with whom he traveled around the world.
- Brother Mask, Kimbal.
- Ira Ehrenpreis, a member of the compensation committee who was also heavily influenced by his relationship with Musk and his brother.
- Brad Bass, another member of the compensation committee who had significant investments in Musk's companies.
- Robin Denholm, chairman of the board of directors of Tesla, whose compensation was significantly higher than earnings from other sources.
- Linda Johnson Rice, independent member of the board of directors.
- Steve Jurvetson, who did not play a major role in this incident as he was absent for most of the meetings.
The court decision focuses on the closeness of Musk's relationship with members of the board of directors and Musk's special role in managing the company.
Musk's future plans
Musk has expressed a desire to increase his stake in Tesla. He believes that a 25% ownership stake will allow him to better interact with artificial intelligence. Musk currently owns about 13% of the company.
He is awaiting a final decision on the shareholders' lawsuit before proposing a plan to increase his ownership stake.
The court's decision could be a significant test for Elon Musk and his position on the list of the world's richest people. He will continue to fight for more control over Tesla and continues to await a final decision on the shareholder lawsuit.
Musk also emphasizes the need for caution when choosing where to incorporate a company, based on his personal experience.
Answers to questions:
A Delaware court overturned Tesla CEO's compensation package in response to an investor lawsuit.
If the decision is upheld on appeal, it could significantly change Elon Musk's overall fortune, moving him from first to third place in the ranking of the world's richest people .
What facts does the judge not consider to justify the largest compensation package in the history of the public markets?
The judge does not consider Musk's ambitious goals and the need for his presence for the successful development of Tesla to be justified.
- Tesla - automobile company specializing in electric cars and renewable energy.
- Elon Musk is the CEO and founder of Tesla, SpaceX and Neuralink.