Elon Musk's payout package reinstated by Delaware Supreme Court

The Delaware Supreme Court has reinstated Elon Musk’s massive $56 billion Tesla pay package from 2018, ruling unanimously that its cancellation would leave him “uncompensated for his time and efforts over a period of six years.”

With Tesla’s stock hitting all-time highs this week, the reinstated package is estimated by Bloomberg on Friday to be worth approximately $140 billion.

This decision likely concludes a protracted legal dispute that significantly soured Musk on the state of Delaware. The controversy ultimately led him to move Tesla’s incorporation from Delaware to Texas, a move that prompted other corporations to follow suit.

Elon Musk celebrated the news on X, posting “Vindicated” and replying to shareholder Alexandra Merz (“TeslaBoomerMama”) with “Thank you for your unwavering support.”

Following this development, Tesla will likely rescind a separate $29 billion pay package offered to Musk earlier this year, which was intended as a safeguard in case the company lost the Delaware Supreme Court appeal. This is distinct from the $1 trillion compensation package awarded to Musk in November, which remains in effect and requires him to meet a series of ambitious targets to realize its full value.

The separate 2018 award, which had its own set of performance milestones, was fully unlocked by Musk and Tesla. However, the award had been challenged in a 2018 shareholder lawsuit alleging improper negotiation and inadequate disclosure of conflicts of interest to shareholders.

Musk and Tesla supporters criticized the lawsuit as absurd, highlighting that the plaintiff, a former corporate defense lawyer and heavy metal drummer named Richard Tornetta, owned only nine shares of company stock.

After years of back-and-forth, including a trial where Musk defended the plan, the Chancery Court judge overseeing the case agreed with the plaintiff and initially struck down the pay package in January 2024. Despite a shareholder “re-approval” of the package at Tesla’s 2024 annual meeting, the judge reaffirmed her initial decision in December 2024, prompting Tesla to appeal soon after.