Elon Musk’s $50 Billion Tesla Pay Was Struck Down. What Happens Next?

The company’s board of directors will now decide whether to appeal the decision, change where Tesla is incorporated or negotiate a new pay package.

A Delaware judge’s decision to void the pay package that helped make Elon Musk the world’s richest person leaves Tesla’s board of directors with some difficult decisions to make.

Chancellor Kathaleen St. J. McCormick of the Delaware Court of Chancery on Tuesday ordered Tesla to cancel stock options awarded to Mr. Musk, the electric car company’s chief executive, worth about $50 billion. Now the company’s directors must figure out a new compensation plan that can pass legal muster and satisfy Mr. Musk, who recently demanded that the board substantially increase his ownership of Tesla.

Tesla and Mr. Musk could appeal the court decision. Mr. Musk has also indicated that he might seek to incorporate the company in another state that he believes could be more hospitable to businesses, like Texas.

As part of a compensation package Tesla finalized in 2018, Mr. Musk received options to buy 304 million shares that are now worth more than $50 billion. While he has met the goals needed to receive those options, Mr. Musk does not appear to have converted them into shares of Tesla. If he had, he would be barred from selling them for five years.

Chancellor McCormick said in her decision that Tesla must cancel the options, although she has not yet issued a formal order requiring the company to do so.

Even without the stock from that package, Tesla has made Mr. Musk unimaginably rich. He owns roughly 411 million Tesla shares that are worth around $78 billion. A securities filing last year said he had pledged 238 million shares for personal loans.

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