Delaware Supreme Court Reinstates Landmark $56 Billion Tesla Pay Package for Elon Musk

The Delaware Supreme Court has reversed a lower court's decision, reinstating Elon Musk's 2018 compensation package, initially valued at $56 billion and now worth approximately $139 billion. The court unanimously found the prior rescission "improper and inequitable," stating it left Musk uncompensated for years of leadership.

Key Takeaways

• The Delaware Supreme Court reinstated Elon Musk's 2018 Tesla CEO pay package.

• The package, initially valued at $56 billion, is now worth around $139 billion.

• The court criticized the lower court's decision to void the package as excessive.

• Shareholders had overwhelmingly approved the package in 2018 and again in 2024.

A Hard-Fought Victory

The Delaware Supreme Court's ruling on Friday overturned Chancellor Kathaleen McCormick's 2024 decision, which had voided the 2018 package due to alleged board conflicts and insufficient shareholder disclosures. The high court acknowledged differing views on liability but agreed that complete rescission was too extreme, leaving Musk without compensation for six years of "transformative leadership."

Musk expressed his vindication on X, formerly Twitter, and shared his gratitude towards Tesla shareholders. The 2018 plan awarded Musk options for approximately 304 million shares, contingent on achieving ambitious milestones, all of which were met ahead of schedule. The package was initially approved by shareholders in 2018 and subsequently ratified in 2024 after the lower court's ruling. The lawsuit challenging the pay package was initiated by plaintiff Richard Tornetta, who held only nine shares at the time of the initial approval.

Impact on Corporate Landscape

This lengthy legal battle surrounding Musk's pay package has been cited as a factor that may have damaged Delaware's reputation as a favorable corporate jurisdiction. Several prominent companies, including Dropbox, Roblox, Trade Desk, and Coinbase, have since moved their incorporation out of the state, mirroring Tesla's earlier relocation to Texas. Adding to the controversy, Tornetta's legal team sought a fee of over $5.1 billion in Tesla stock following the lower court's decision, equating to an hourly rate exceeding $200,000.

Tesla's victory in this case helps the company avoid a potential earnings hit of approximately $26 billion if the award had to be replaced at current stock prices. The company has also secured interim plans, including a package approved in November 2025 potentially valued at $878 billion, tied to ambitious goals for its Robotaxi and Optimus projects.