If the ruling is upheld on appeal, it would mean that Tesla’s board will need to create a new proposal for executive compensation. This decision marks a significant loss for the electric-car maker’s co-founder, as it is his first major defeat in court.

Despite being granted the largest executive compensation plan in history over five years ago, Musk refrained from exercising his options due to the ongoing legal challenge in Delaware Chancery Court. Following the announcement of the ruling, Tesla’s share price experienced a decline of approximately 3% in after-hours trading.

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