Musk may drop below Bezos in world’s richest list after court rules he cannot keep $56bn Tesla payout

Elon Musk may lose his position as the world’s richest person after a US judge ordered him to return a corporate payout worth nearly $56 billion.

A court in Delaware ruled on Tuesday that the SpaceX and Neuralink boss could not keep the massive pay package he received from Tesla, the electric car company that he has run since 2008.

The ruling was a victory for Tesla shareholders who had accused Mr Musk of effectively dictating the terms of his own pay to board members who were not truly independent of him.

If implemented, the court’s order would slash Mr Musk’s estimated $200bn-plus fortune and probably drop him below Amazon founder Jeff Bezos and French fashion baron Bernard Arnault in the rankings of Earth’s wealthiest humans.

Mr Musk will have an opportunity to appeal the judgement.

“Swept up by the rhetoric of ‘all upside,’ or perhaps starry-eyed by Musk’s superstar appeal, the board never asked the $55.8 billion question: Was the plan even necessary for Tesla to retain Musk and achieve its goals?” wrote judge Kathaleen McCormick, according to Reuters.

“Never incorporate your company in the state of Delaware,” quipped Mr Musk in response. Tesla shares slipped by as much as 4 per cent in after-hours trading on Tuesday evening.

During the trial, Tesla’s lawyers argued that the mammoth pay package – agreed in 2018 – was necessary to keep one of the world’s foremost engineers focused on the company.

At the time, Tesla was mired in “production hell” and struggling to produce its Model 3 sedan in large numbers. Mr Musk’s deal awarded him an extra 1 per cent of the company’s shares for each commercial milestone that he reached.

Since then, the company has smashed past all 12 milestones and become one of the most valuable enterprises in the world, propelling Mr Musk from the mid-twenties of Forbes’ rich list all the way to the top.

At their peak, Tesla’s shares traded at nearly 14 times their value at the beginning of 2020, and even today – after a sustained period of economic gloom and a rough year for the company – they remain more than five times that level.

Antonia Gracias, who sat on Tesla’s board from 2007 to 2021, argued in court that it was “a great deal for shareholders” because it had led the company to new heights of success.