Judge rules Elon Musk's $56bn pay deal "unfathomable"

A US judge has called Elon Musk's 2018 Tesla pay deal worth $56bn "unfathomable" and has ruled that it should the cancelled. The pay deal, which is the biggest ever in US history was challenged by a Tesla shareholder who argued it was an overpayment.

Tesla's package tied Musk's compensation to performance targets, such as Tesla's share price and profitability. He does not receive a salary.

But Tesla shareholder Richard Tornetta argued the tycoon was being overpaid. Despite owning just nine Tesla shares he launched legal action calling for the award to be rescinded. He said shareholders were not given enough information about how easily Musk's performance goals would be achieved.

In the ruling, Judge McCormick made note of the "extensive ties" Musk has with Tesla officials deciding his pay award. She said that five of the six directors on the board's compensation committee "were beholden to Musk or had compromising conflicts".

When Tesla put forward Musk's original 10-year pay package in 2018, it attracted widespread public attention. Several shareholder advisory groups recommended voting against the plan, saying it was overly generous.

Shares in Tesla were down by around 2.5% in extended New York trade. They have lost more than 20% of their value so far this year. After selling a large chunk of his stake in Tesla to buy X, Musk currently owns about 13% of the electric carmaker but has recently said he wants a bigger stake in the firm.