The Delaware Supreme Court has reinstated Elon Musk’s $56 billion pay package from 2018, reversing a previous decision made by the state’s Chancery Court. The unanimous ruling, issued Friday, emphasized that revoking Musk’s compensation left him “uncompensated for his time and efforts over a period of six years.” With Tesla’s stock reaching record highs this week, the reinstated package could potentially be valued at approximately $140 billion, according to Bloomberg.
This ruling likely marks the conclusion of a protracted legal dispute that had prompted Musk to relocate Tesla’s incorporation from Delaware to Texas—a move that set a precedent, encouraging other companies to consider similar relocations. Following the court’s decision, Musk expressed his satisfaction on social media platform X, stating he felt “vindicated” and thanking supporters, including noted shareholder Alexandra Merz, who is recognized as “TeslaBoomerMama.”
With the reinstatement of the original package, Tesla is expected to rescind a $29 billion pay proposal made to Musk earlier this year, designed as a precaution in case the Delaware Supreme Court ruling did not go in their favor. The $1 trillion compensation deal awarded to Musk in November remains unaffected and involves a series of challenging performance objectives Musk must reach to access its full value.
Initially, Musk’s 2018 pay award included several performance milestones. Although he and Tesla achieved all the specified goals, the package faced backlash soon after its approval when a shareholder, Richard Tornetta—a former corporate defense attorney and heavy metal drummer—filed a lawsuit claiming the agreement was improperly negotiated and that shareholders were not adequately informed about potential conflicts of interest.
Supporters of Musk decried Tornetta’s legal action, highlighting the fact that he owned just nine shares of Tesla stock at the time. The legal saga included extensive hearings, with Musk himself testifying during the proceedings. Ultimately, the Chancery Court judge sided with Tornetta, striking down the pay package in January 2024. Following a shareholder vote during Tesla’s annual meeting that reaffirmed the package, the judge upheld her decision a month later, prompting the company’s appeal.
The recent ruling from the Delaware Supreme Court concludes an extensive battle that has captivated attention within the legal, financial, and tech communities. Musk’s journey, marked by fierce loyalty from supporters and significant controversy, continues to be intricately linked with Tesla’s trajectory as it navigates complex corporate governance amid soaring stock performance.
