Delaware judge overturns Elon Musk’s $56 billion Tesla record salary, Reuters writes

Tesla’s board has been criticized for failing to provide oversight for its chief executive, who was running several other companies at the same time.

The judge found that Musk negotiated the salary with company executives who appeared to be in Musk’s debt.

“The board never asked the question of the $55.8 billion: was this salary really necessary for Tesla to retain Musk and achieve its goals?” Judge Kathleen McCormick wrote

The decision comes as Tesla warns of slowing growth and the electric car industry overestimates market demand.

Under Musk, Tesla has become the most expensive automaker in the world, but much of that value is based on expectations of future breakthroughs such as self-driving cars.

“The incredible size of the largest compensation plan in history — an unfathomable amount — appears to have been calibrated to help Musk achieve a ‘good future for humanity,'” McCormick wrote in his 201-page opinion.

Musk said the money would be used to finance interplanetary travel.

“This is the way to get humanity to Mars,” he testified. “Tesla can help make that happen”

The decision comes as Tesla prepares for a new round of pay talks with its CEO. Musk said in a post on X this month that he was uncomfortable running Tesla unless he owned 25 percent of the votes. At that time, the billionaire owned about 13% of the company

McCormick wrote that many of Tesla’s board directors, including current members Kimbal Musk, Elon Musk’s brother, and James Murdoch, son of media mogul Rupert Murdoch, lacked independence because of their close personal ties to the CEO. She said two other current Tesla executives, Robin Denholm and Ira Ehrenprice, have shown insufficient independence in making pay decisions.

The board currently consists of eight members, including the CEO.

During the trial, Tesla executives argued that the company was paying to keep one of the world’s most dynamic entrepreneurs focused on the electric car maker. Antonio Gracias, Tesla’s chief executive from 2007 to 2021, called the package “a great deal for shareholders.”

Amit Batish of Equilar, an executive compensation research firm, estimated in 2022 that Musk’s package was roughly six times the combined pay of the world’s highest-paid executives.