00:00 Here's your Forbes Daily Briefing for Friday, February 2nd.
00:05 Today on Forbes, Elon Musk no longer world's richest after judge voids $51 billion pay
00:11 package
00:12 Elon Musk ceded the title of the world's richest person to Frenchman Bernard Arnault
00:19 of luxury conglomerate LVMH as of Tuesday evening after a Delaware judge voided a hefty
00:25 package of performance-based Tesla options awarded to Musk in 2018.
00:30 Those shares had been worth more than $50 billion.
00:35 Forbes estimates that Musk is now worth $184.5 billion.
00:40 He now trails Arnault, who has an estimated net worth of $210.8 billion.
00:46 But he remains ahead of the world's third richest person, Amazon's Jeff Bezos, who has
00:51 an estimated net worth of $179 billion.
00:55 In her ruling, Delaware judge Kathleen McCormick determined that Musk and his co-defendants,
01:01 Tesla and certain of its board members, failed to prove that the process underlying the award
01:06 of "the largest potential compensation opportunity ever observed in public markets" was fair
01:13 due to conflicts of interest and Musk's "control" over the board.
01:18 Musk's options were worth $50.9 billion net of exercise costs at Tuesday's stock market
01:24 close.
01:25 Because of the ruling, he won't be able to exercise or sell them.
01:29 Given the high level of uncertainty about what comes next, including an appeal of the
01:33 ruling, Forbes has discounted Musk's options by 50 percent, enough to knock his net worth
01:39 down by $25.5 billion after the decision.
01:44 UCLA law professor Jim Park says, "The ruling will certainly be appealed, and there is some
01:51 chance of reversal or a different remedy.
01:54 Chancellor McCormick is well regarded and known as careful, so I think there's a good
01:58 chance her decision will get some deference from the Delaware Supreme Court.
02:02 On the other hand, perhaps the Supreme Court will worry that the decision will send a negative
02:06 message to the business community and will thus reduce the award."
02:12 There is also the possibility that Tesla could just grant Musk another pay package with a
02:16 more rigorous process designed to withstand legal scrutiny.
02:20 After all, Tesla shareholders, whose stock has appreciated more than sevenfold since
02:25 2018, haven't exactly celebrated the decision by the Delaware court.
02:30 Shares of Tesla were trading down 0.8 percent as of 2.30 p.m. Eastern Time on Wednesday.
02:37 Michigan law professor Adam Pritchard says, "If the pay package is struck down, Musk will
02:43 demand another, and he'll get it.
02:46 But it's very hard to say how different that would be from this package."
02:51 Musk had been clamoring for even more Tesla shares prior to the Delaware judge's decision.
02:56 In an ex-post on January 15th, he wrote, "I am uncomfortable growing Tesla to be a leader
03:02 in AI and robotics without having approximately 25 percent voting control."
03:08 If upheld on appeal, the judge's decision to void Musk's options pay package would drop
03:13 his stake in Tesla from 22 percent to 13 percent.
03:19 For full coverage, check out Matt Durow's piece on Forbes.com.
03:25 This is Kieran Meadows from Forbes.
03:27 Thanks for tuning in.
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03:40 (upbeat music)
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