Bernard Arnault overtakes Elon Musk as world's richest person after judge voids $51 billion pay package
Bernard Arnault, the head of luxury conglomerate LVMH, has overtaken Elon Musk as the world's wealthiest person. The news comes following a landmark ruling by a Delaware judge in which the court overturned the decision by Tesla to grant Musk a substantial performance-based options package valued at over $50 billion at the time.
As a result, Musk's estimated net worth has plummeted to $184.5 billion, placing him behind Arnault, who now boasts a net worth of $210.8 billion. Despite this setback, Musk still maintains a lead over Amazon's Jeff Bezos, the third richest individual globally, with a net worth of $179 billion.
Judge Kathleen McCormick made the ruling after determining that there was not enough evidence from Musk and his co-defendants, including Tesla and specific board members, to establish the fairness of the process that led to Musk getting awarded the package.
McCormick also highlighted conflicts of interest and Musk's significant influence over the board as key factors undermining the legitimacy of the award. The options, valued at $50.9 billion at the recent stock market close, are now rendered non-exercisable or salable due to the court's decision.
Given the high level of uncertainty about what comes next–including an appeal of the ruling, Forbes has discounted Musk’s options by 50%, enough to knock his net worth down by $25.5 billion after the decision.
Forbes, in response to the heightened uncertainty surrounding Musk's financial future, has discounted the value of the options by 50%, resulting in a staggering $25.5 billion reduction in his net worth.
As Tesla shares experienced a 0.8% decline following the court ruling, there is speculation about the company's response. Analysts raise the possibility of Tesla granting Musk another compensation package, one that undergoes a more rigorous process to withstand legal scrutiny.
Moreover, shareholders, who have witnessed a sevenfold increase in Tesla's stock value since 2018, are not celebrating the court decision, prompting discussions about the potential impact on future executive compensation strategies.