Elon Musk sees $56bn Tesla pay deal cancelled in Delaware court

A judge in the US state of Delaware has annulled a $55.8bn (£44bn) pay deal awarded to Elon Musk in 2018 by the electric car company Tesla.

The lawsuit was filed by a shareholder who argued that it was an overpayment.

Judge Kathaleen McCormick found Tesla directors, who negotiated the pay package, were “perhaps starry eyed” due to Mr Musk’s “superstar appeal” and did not fully inform shareholders.

 

She said the deal was “unfathomable” and ruled it should be cancelled.

When Tesla put forward Mr Musk’s original 10-year pay package in 2018, it attracted widespread public attention. Several shareholder advisory groups recommended voting against the plan, saying it was overly generous.

 

Brian Quinn, a professor at Boston College Law School, told the BBC it was “hard to justify a transaction like this”, given Mr Musk’s influence over the board.

 

“He treats Tesla like his own, but even if he calls himself the ‘Techno-king of Tesla’, he is not the majority owner,” Prof Quinn added.

 

After selling a large chunk of his stake in Tesla to buy X, Mr Musk currently owns about 13% of the electric carmaker but has recently said he wants a bigger stake in the firm.

 

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