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A judge in US Delaware invalidates an option package for Elon Musk worth $56 billion. A small investor found that extra reward unreasonably high and is vindicated by the court.

At issue: Tesla's board of directors awarded CEO Musk a long-term bonus in 2018 in the form of stock options that he would receive every time Tesla met certain financial targets. Because the automaker succeeded each time, Musk thus acquired a reward package worth a sloppy $56 billion, which is about a quarter of his current total assets.

The news: Small-time investor Richard Tornetta filed an opposition to the bonus right back in 2018 and went to court. That led to today's ruling, which vindicates him.

  • Tornetta did not think it was necessary for Musk, who is already a major Tesla shareholder, to be rewarded even more through the stock market.
  • He also felt that the board of directors that approved the bonus was not acting in the best interests of the company. That board of directors, in addition to Elon Musk himself, includes his brother Kimbal and media mogul James Murdoch.
  • The board argued that it is in the interest of all Tesla shareholders that Musk remain associated with the company for a long time. His lawyers also pointed out that the bonus was approved by a large majority.

Colonizing Mars

Worth noting: Musk dragged in his plans on space exploration, according to Judge Kathaleen McCormick's ruling:

👉 "Colonizing Mars is an expensive undertaking. Musk believes he has a moral obligation to use his assets for that purpose, and Musk sees his compensation from Tesla as a way to fund that mission. Musk feels that working at Tesla is only worth his time if that work generates 'additional economic resources' that can be used to make life multi-planetary," she writes.

How to proceed: The case is not yet finally settled, as Musk can appeal the verdict. Tesla shares fell 2-3 percent on the news in a preliminary reaction. If the American South African has to finally draw a line under a quarter of his wealth, he will no longer be the richest person on earth and will drop to third place on the billionaire list , behind LVMH boss Bernard Arnault and Amazon founder Jeff Bezos.

© The Content Exchange, source News