By Ben Glickman


Elon Musk's multibillion-dollar pay package as chief executive of Tesla was struck down Tuesday by a judge.

The decision in the Delaware Court of Chancery strikes down a pay package initially approved for Musk in 2018. At the time, the package had a $55.8 billion maximum value and was the largest potential pay package ever in public markets.

Richard Tornetta, a Tesla shareholder, sought to cancel the pay package in a lawsuit, alleging Musk had dictated the terms of his compensation and that shareholders had incomplete information when voting for the package.

In the post-trial opinion, Chancellor Kathaleen McCormick ruled that the defendants, Tesla and Musk, failed to prove the compensation plan was fair. The ruling means the electric-vehicle maker must draft a new compensation package for the CEO.

The compensation plan tied certain stock option tranches for Musk to Tesla's market capitalization and certain earnings targets.

Musk, the company's largest shareholder, recently owned about 13% of Tesla.


Write to Ben Glickman at ben.glickman@wsj.com

(END) Dow Jones Newswires

01-30-24 1747ET