Elon Musk Is No Longer World’s Richest Person

A Delaware judge’s decision has caused a seismic shift in the financial landscape, making Elon Musk relinquish his title as the world’s richest person. This drastic turn of events unfolded after the judge voided a substantial package of performance-based Tesla options that had been awarded to Musk in 2018. The shares, valued at over $50 billion, played a pivotal role in Musk’s status as the wealthiest individual.

Delaware judge Kathaleen McCormick’s ruling emphasized critical deficiencies in the process leading to the colossal compensation opportunity presented to Musk. The judge highlighted conflicts of interest and Musk’s considerable influence over Tesla’s board as factors that compromised the fairness of the award. At the stock market’s close on Tuesday, Musk’s options were valued at $50.9 billion, a staggering sum that now remains unattainable due to the court’s decision.

Forbes, in its estimation, places Musk’s current net worth at $184.5 billion, trailing behind Bernard Arnault, the head of LVMH, and still ahead of Amazon’s Jeff Bezos. The ruling has prompted Forbes to discount Musk’s options by 50%, resulting in a significant dent of $25.5 billion in his net worth.

Legal experts speculate on potential outcomes, anticipating an appeal of the ruling and the likelihood of reversal or an alternative remedy. UCLA law professor Jim Park notes the credibility of Judge McCormick but acknowledges the uncertainty surrounding potential decisions from the Delaware Supreme Court. The prospect of negative repercussions on the business community and the potential reduction of the award could influence the Supreme Court’s stance.

Despite the setback, there remains the possibility of Tesla granting Musk another compensation package, potentially incorporating a more robust and legally resilient process. Tesla shareholders, however, have not greeted the court’s decision with enthusiasm, evident in a slight drop in Tesla’s stock value.

Michigan law professor Adam Pritchard predicts Musk’s resilience, suggesting that if the current pay package is invalidated, Musk will likely negotiate and secure another, although the specifics of such a package remain uncertain.

In a notable twist, Musk, before the Delaware decision, had expressed his discomfort in growing Tesla’s influence in AI and robotics without maintaining approximately 25% voting control. If the ruling stands, Musk’s stake in Tesla could diminish from 22% to 13%, marking a significant shift in his influence over the company.

As the legal saga unfolds, the fate of Musk’s financial standing and Tesla’s approach to future compensation packages remain shrouded in uncertainty.