Elon Musk’s $56 billion Tesla compensation voided by judge, shares slide
Elon Musk's $56 billion Tesla compensation package has been voided by a Delaware judge.
Tesla's shares dropped about 3% in after-hours trading following the court decision.
Judge Kathaleen McCormick ruled that Tesla's board failed to prove the fairness of Musk's pay package
The decision comes from a lawsuit filed by shareholder Richard Tornetta against the electric automaker.
Musk's 2018 compensation plan was the largest in public corporate history, making him the richest person globally.
The court ruling includes a recall request for Musk to return the compensation received under the plan.
The judge found that Musk, not the board, controlled Tesla, especially regarding his compensation.
Little evidence of negotiations, and the Compensation Committee worked alongside Musk rather than negotiating against him.
Musk suggested in a tweet that companies should avoid incorporating in Delaware and later initiated a poll on changing Tesla's state of incorporation to Texas.
Musk has the option to appeal the decision to the Delaware Supreme Court.
Musk raised the idea of changing Tesla's state of incorporation to Texas in response to the court ruling.
Tornetta's lawyer, Greg Varallo, expressed gratitude for the court's decision, anticipating benefits for Tesla investors.