Elon Musk secured a massive victory on Friday over his long fight about his Tesla compensation deal, when the Delaware Supreme Court restored the $55 billion pay package he was awarded in 2018. This reverses a lower court ruling that had stripped it away.
The latest ruling delivers a major financial boost to Musk, who already ranks as the world’s richest person, and overturns a January 2024 judgment that nullified the incentive plan after a lawsuit from a Tesla shareholder. Musk had argued that the Delaware courts overreached in rescinding the deal, a view now echoed by the state’s highest court.
Tesla did not respond to a request for comment late Friday, AP indicated in a report.
The original ruling by Chancellor Kathaleen St. Jude McCormick had far-reaching consequences beyond the courtroom. Angered by the decision, Musk led Tesla to abandon Delaware and reincorporate in Texas. The fallout also pushed Tesla’s board into action as it sought to reassure its chief executive and stabilize leadership at the company.
As part of that effort, shareholders were asked to revisit the disputed pay package. Eighteen months ago, they voted to reaffirm the compensation plan, then valued at $44.9 billion, signaling continued support for Musk despite the legal setback.
That show of confidence did not end the matter. Earlier this year, Tesla’s board unveiled an even more ambitious compensation framework that could eventually be worth $1 trillion if Musk succeeds in driving the company’s market value from about $1.6 trillion today to $8.5 trillion over the next decade. Shareholders approved that plan last month, a result that Musk welcomed publicly.
When the 2018 package was first introduced, its performance targets appeared daunting. Tesla was still grappling with manufacturing bottlenecks and heavy cash burn, and the company’s market capitalization sat between $50 billion and $75 billion. The incentives were structured around aggressive benchmarks that many observers viewed as unlikely to be met.
READ ALSO: Delaware judge reaffirms Tesla must revoke Elon Musk’s controversial pay package
Those doubts faded as Tesla’s production problems eased and demand for its electric vehicles surged. Rising sales and a soaring stock price ultimately propelled the company to levels that unlocked the full payout promised to Musk under the original agreement.
McCormick later concluded, based in part on Musk’s testimony during a 2022 trial, that the compensation plan had been shaped by a board too closely aligned with its chief executive. That finding formed the basis for her decision to void the package.
The Delaware Supreme Court disagreed. In a 49-page opinion, the justices pointed to multiple errors in the 2024 ruling, ordered the 2018 pay package reinstated, and awarded Tesla $1 in nominal damages.
