Tesla CEO Elon Musk's Rs 4.65 lakh crore pay package blocked by court for the second time, here is what happend

The world's richest man, Elon Musk, who has seen his wealth skyrocket in the past few weeks, has to wait longer for a multi-billion dollar payday as a court has once again blocked his Tesla pay package. On Monday, the Delaware Chancery Court rejected a Tesla shareholder-approved pay package of $56 billion (Rs 4.65 lakh crore) for Musk.

CREDIT: REUTERS

Elon Musk's paypage approved by shareholders twice

This is despite the fact that the astronomical pay package was approved by Tesla shareholders for the second time in a June meeting. The Tesla shareholders had to approve the pay package for Musk for the second time as the Delaware court judge Kathaleen McCormick had originally thrown it out in January this year.

Elon Musk's Tesla paypage

The multi-billion dollar pay package for Musk was approved by Tesla's board, comprising the world's richest man's friends and family, in 2018, on the condition that the company realise certain revenue and market targets.

The compensation package, which came in the form of Tesla stocks, was to be unlocked in 12 different tranches upon the realisation of the targets, which Musk has now achieved.

CREDIT: REUTERS

How the Musk compensation ended up in court

However, the world's most lucrative pay package for a CEO was challenged by Richard Tornetta, who owned nine shares of Tesla, arguing that shareholders were misled by the director board and that the package was not in the best interest of investors. Some other investors, including the California State Teachers Retirement System, also opposed the 2018 Musk pay package.

Also read: Elon Musk is the richest he has been so far, now worth nearly $350 billion

What court said in January

In January this year, Judge McCormick ruled in favour of the complainants, observing that Musk and the Tesla board ¡°bore the burden of proving that the compensation plan was fair, and they failed to meet their burden.¡±

CREDIT: REUTERS

After the Tesla board re-approved Musk's compensation package, Judge McCormick said that although it had been ratified again by a majority of shareholders, it didn¡¯t mean it was in shareholders¡¯ best interests.

Musk's pay package, which was worth $56 billion in January, has since appreciated in value to $101.4 billion due to the recent increase in Tesla stock prices.

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