
As Elon Musk's $56 billion pay deal was thrown away on Tuesday by a Delaware court, questions and suggestions have begun swirling around as to how the Tesla chief and the board officials will come out of this predicament that has dethroned Musk as the richest man in the world.
The verdict of Kathaleen McCormick determined that Musk, with Tesla and certain of its board members, failed to validate that the process involving the award of “the largest potential compensation opportunity ever observed in public markets” was fair due to conflicts of interest and Musk’s “control” over the board
The dislodge of the deal is seen abetting biggest backers who, for so long, voiced their concerns regarding the dependence of Tesla board.
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The unfavourable development could prove a turning point for Musk, who earlier claimed that he was uncomfortable to transform Tesla into an artificial intelligence (AI) leader in case his control of did not aligned with the new pay package, according to Reuters.
While reflecting on the matter, Ross Gerber, a Tesla shareholder, said "This throws Tesla into a complete sort of tailspin from an executive perspective."
The Tesla shareholder was of the view that the court ruling essentially required new independent board members who could keep an eye on and manage the CEO's decisions and actions.
"Then it gets real messy because Elon - it's either his way or the highway," added Gerber, who publicly termed the Tesla board's management and decision-making as independent.
Keeping the cards close to chest, the Tesla boss has not reflected on what will be his next move so far. However, the EV manufacturing company's shares registered a 2.2pc loss following the ruling on Tuesday.
If the ruling remains intact, it is expected that Musk will have to return the chunks he has received as part of the pay deal, as he has fulfilled the 2018 contract terms and received 12 tranches of options worth about $51 billion.
The court ruling stated that the options grant "sits unexercised and undisturbed," so losing his earnings may not be a complex matter. However, determining what to substitute the package with will be a challenging process, as it is uncertain who will negotiate on behalf of Tesla.
The judge who dismissed the package described it as an "unfathomable sum" that was unjust to shareholders and raised doubts about the board's impartiality.
According to Equilar's estimation in 2022, Musk's package was approximately six times larger than the combined compensation of the top 200 highest-paid executives in 2021. As of Wednesday, Forbes calculated Musk to be the world's second-richest person, with a net worth of $184 billion.