Billionaire Tesla chief Elon Musk has had his huge $56bn pay award rejected at a Delaware court.

The judge ruled that Musk’s record-breaking award will not be reinstated after months of legal disputes. She previously rejected it in January. The decision comes despite the fact that it was approved by Tesla shareholders and directors in the summer.

Judge Kathaleen McCormick has argued that board members were too heavily influenced by Musk.

While Tesla has vowed to appeal against the ruling, Musk reacted on X, saying, “Shareholders should control company votes, not judges.”

Tesla also posted, “This ruling, if not overturned, means that judges and plaintiffs’ lawyers run Delaware companies rather than their rightful owners – the shareholders.”

The mammoth sum would have been the most substantial pay package for the boss of a listed company to ever receive, according to Judge McCormick.

She said that Tesla failed to prove the pay package, dating back to 2018, was fair.

Elon Musk currently stands as the world’s richest person and is also the owner of social media platform X and astronautics company SpaceX. His net worth is estimated to be around $350bn, according to the Bloomberg Billionaires Index.

He is also set to have a government job once Donald Trump comes into office. The president-elect has picked Musk to lead a newly created Department of Government Efficiency (Doge).

Trump explained that Doge would help the administration “dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures and restructure Federal Agencies”.

Tesla shareholders voted to pass the incredible pay packet by 75% in June, but the judge rejected the “creative arguments” outlined by Musk’s lawyers for why the pay should be so large.

She wrote, “Even if a stockholder vote could have a ratifying effect, it could not do so here.”

Judge McCormick also ruled the Tesla shareholder who brought the case against the company and Mr Musk should receive fees of $345m and not the $5.6bn in Tesla shares they requested.

Charles Elson of the University of Delaware’s Weinberg Center for Corporate Governance said Judge McCormick’s opinion was well-reasoned.

He said, “You had a board that wasn’t independent, a process that was dominated by the chief executive, and a package that was way out of any sort of reasonable bounds. It’s quite a combo.”

Tesla moved its legal base to Texas after the pay ruling earlier this year, and Elson said he expects Tesla to try to get approval for another pay package there. At the time, 63% of Tesla shareholders backed reincorporating Tesla in Texas.