A $56 billion pay package granted by Tesla to Elon Musk in 2018 has been nullified by a Delaware judge who ruled that the company’s board of directors failed to prove “the compensation plan was fair.”

Chancery Court Judge Kathaleen McCormick voided the payment package to Mr. Musk on Jan. 30 as part of a lawsuit filed by Richard Tornetta, a shareholder in the electric vehicle maker, five years ago.

Under the package offered by Tesla, Mr. Musk had the chance to secure 12 tranches of Tesla stock options, which would vest if Tesla achieved various market capitalization and operational milestones, such as a $50 billion increase in its market capitalization.

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