A Delaware judge voided Tesla CEO Elon Musk’s eye-popping $55.8 billion pay package from Tesla on Tuesday, according to a filing, potentially delivering a hit to the tech billionaire’s wealth after a shareholder argued the package was excessive.
The ruling, which can be appealed, means that Tesla’s board will have to start from scratch on a new pay proposal for Musk—the wealthiest man in the world.
Tesla shareholder Richard Tornetta argued Tesla’s board breached its fiduciary duties by awarding Musk the performance-based plan, which was “the largest potential compensation opportunity ever observed in public markets,” according to the filing.
The judge, Kathaleen McCormick, said in her ruling that Tornetta and Tesla will have to discuss a “form of final order” implementing the decision and submit a joint letter that identifies all issues that “need to be addressed to bring this matter to a conclusion at the trial level.”
Tesla shares closed Tuesday at $191.59 and have dropped more than 3% in after-hours trading as of 5:30 p.m.
Tesla didn’t immediately respond to Forbes’ request for comment.
“Never incorporate your company in the state of Delaware,” Musk tweeted following the decision. Companies often incorporate themselves in the state due to its tax benefits, corporation-friendly laws and privacy policies.
We estimate Musk’s net worth at $210.6 billion. The Tesla chief reclaimed the No. 1 spot on Forbes’ real-time billionaires list from LVMH CEO Bernard Arnault on Tuesday after a small recovery made by Tesla’s stock, which slid significantly last week.
“The incredible size of the biggest compensation plan ever—an unfathomable sum—seems to have been calibrated to help Musk achieve what he believed would make ‘a good future for humanity,’” McCormick said in the filing.
Musk’s previous compensation plan from 2018 provided the billionaire with 93.9 million options that were worth $86.8 billion by 2022, according to CNN, which noted Musk doesn’t receive any cash salary or bonus. Musk, a founder in six companies including Tesla and SpaceX, owns about 21% of Tesla between stock and options. The company’s market capitalization is $610.2 billion as of Tuesday.