KUALA LUMPUR (Feb 2): Tesla Inc chief executive officer Elon Musk has slipped to second spot on the list of Forbes’ richest, after a Delaware judge voided a hefty package of performance-based Tesla options awarded to him in 2018.

In a report on Wednesday, Forbes said those shares were worth more than US$50 billion (RM236.25 billion).

Forbes estimated that Musk is now worth US$184.5 billion, trailing LVMH CEO Bernard Arnault (estimated net worth: US$210.8 billion), but remains ahead of the world’s third richest person, Amazon’s Jeff Bezos (US$179 billion).

The magazine reported that Delaware judge Kathaleen McCormick determined that Musk and his co-defendants, Tesla and some of its board members, had failed to prove that the process underlying the award of “the largest potential compensation opportunity ever observed in public markets” was fair, due to conflicts of interest and Musk’s “control” over the board.

Musk’s options were worth US$50.9 billion (net of exercise cost) at Tuesday’s stock market close (the value of the package varies based on Tesla's share price; Tesla estimated that the options would be worth US$55.8 billion upon fully vesting, which occurred in late 2022).

Because of the ruling, he won’t be able to exercise or sell them.

Given the high level of uncertainty about what comes next — including an appeal against the ruling, Forbes has discounted Musk’s options by 50%, enough to knock his net worth down by US$25.5 billion after the decision.

There is also the possibility that Tesla could just grant Musk another pay package with a more rigorous process designed to withstand legal scrutiny.

After all, Tesla shareholders, whose stock has appreciated more than sevenfold since 2018, haven’t exactly celebrated the decision by the Delaware court.

Forbes said Musk had been clamouring for even more Tesla shares prior to the Delaware decision. In an X post on Jan 15, he wrote, “I am uncomfortable growing Tesla to be a leader in artificial intelligence and robotics without having about 25% voting control.”

If upheld on appeal, the judge's decision to void Musk's options pay package would drop his stake in Tesla from 22% to 13%.