Sign up for the free weekly IndyTech newsletter delivered straight to your inbox
Sign up for the free IndyTech newsletter
Elon Musk could lose his position as the world’s richest man after a US judge orders him to pay back around $56 billion in corporate dividends.
A Delaware court ruled Tuesday that the presidents of SpaceX and Neuralink cannot keep the huge paychecks they received from electric car company Tesla, which they have run since 2008.
The ruling was a victory for Tesla shareholders, who had accused Musk of effectively dictating his own compensation terms to directors who were not truly independent.
If the court’s order is carried out, Musk’s estimated wealth of more than $200 billion would be reduced, potentially putting him ahead of Amazon founder Jeff Bezos and French fashion mogul Bernard Arnault on the planet’s richest list. He will likely be ranked lower than Mr.
Mr. Musk will have the opportunity to appeal the ruling.
“Perhaps overwhelmed by the ‘everything is going well’ rhetoric or dazzled by Mr. Musk’s superstar appeal, the board never raised the $55.8 billion question. Tesla retained Mr. Musk. Was the plan really necessary to achieve that goal?” Justice Catherine McCormick wrote, according to Reuters.
In response, Musk quipped, “You should never incorporate a company in Delaware.” Tesla shares fell as much as 4% in after-hours trading Tuesday night.
During the trial, Tesla’s lawyers argued that the huge salary agreed to in 2018 was necessary to keep one of the world’s leading engineers focused on the company.
At the time, Tesla was in “production hell,” struggling to mass produce the Model 3 sedan. Musk’s contract included an additional 1 percent stake in the company for each commercial milestone he achieved.
Since then, the company has passed all 12 milestones, becoming one of the world’s most valuable companies and propelling Musk out of his mid-20s. forbes magazine Extensive list all the way to the top.
Tesla’s stock traded at nearly 14 times its peak in early 2020, and remains at more than 5 times that level even after a difficult year for the company amid a continuing economic downturn.
Antonia Gracias, who served on Tesla’s board from 2007 to 2021, argued in court that this was a “great deal for shareholders” as it took the company to new heights of success.