Judge voids Elon Musk's Tesla pay package, describing it as 'an unfathomable sum'

The news: A Delaware judge has ruled that Elon Musk's record-breaking USD56 billion ($85 billion) Tesla pay package could be scrapped, according to a court filing reported by Reuters.

The numbers: The lawsuit was first filed in 2018 by Tesla shareholder Richard Tornetta, who argued that the board didn't tell shareholders that the CEO's targets were easier to achieve than the company was acknowledging, with Musk qualifying for all 12 tranches or performance targets in the pay plan. Earlier this month, the billionaire said he was uncomfortable leading Tesla unless he upped his voting control from around 13% to 25%.

The context: Musk's compensation package — the largest pay package in corporate America, referred to by judge Kathaleen McCormick as "an unfathomable sum" — was ruled to be unfair to shareholders. Musk previously testified in November 2022 that the money would be used to finance interplanetary travel, while Tesla directors argued during a week-long trial that the pay plan ensured the dedication of one of the world's most dynamic entrepreneurs. The latest ruling may be appealed to the Delaware Supreme Court.

What they said: Judge McCormick of Delaware's Court of Chancery wrote in a 201-page opinion: "Swept up by the rhetoric of 'all upside,' or perhaps starry eyed by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?"