Elon Musk secured a major legal victory on Friday after the Delaware Supreme Court cleared the way for him to receive a long-disputed Tesla pay package worth about $55–56 billion, reversing an earlier ruling that had stripped him of the compensation. The decision likely marks the end of a years-long shareholder lawsuit over what was once described as the largest executive pay deal in corporate history.The top court overturned a January 2024 judgment by Delaware Chancery Court judge Kathaleen St. Jude McCormick, who had rescinded the 2018 pay package after finding that Tesla’s board was too close to Musk and failed to follow a fair approval process.
McCormick had called the process “deeply flawed” and ruled that Musk effectively controlled the company at the time, according to CNBC.In its 49-page ruling, the Delaware Supreme Court said the lower court went too far by cancelling the pay package outright.“It is undisputed that Musk fully performed under the 2018 grant, and Tesla and its stockholders were rewarded for his work,” the judges said, according to AFP. The court restored the package and awarded Tesla $1 in nominal damages.The ruling adds to Musk’s already vast wealth, estimated at around $679 billion, as per CNBC. It also supports Musk’s long-held criticism of Delaware’s legal system. Following the 2024 ruling, Musk publicly attacked the judge, encouraged other entrepreneurs to leave Delaware and led Tesla to reincorporate in Texas, AP reported.The original 2018 pay deal was tied entirely to performance milestones. At the time, Tesla was valued between $50 billion and $75 billion and was struggling with production challenges. The package set ambitious targets linked to market value and operations. Over the following years, Tesla’s manufacturing improved, sales surged and its market capitalisation crossed the thresholds needed for Musk to earn the payout, AP noted.Despite shareholder approval of the plan in 2018, Tesla investor Richard Tornetta challenged it in court, arguing it was excessive. While Tesla shareholders later voted again in 2024 to reaffirm the package, McCormick maintained her decision to cancel it. That stance has now been overturned.Tesla’s board has consistently backed Musk. In recent years, it approved an interim compensation award worth about $29 billion and later unveiled an even larger long-term pay plan, AFP reported. Shareholders approved that new package last month. The plan could be worth up to $1 trillion if Musk leads Tesla to raise its market value from about $1.6 trillion to $8.5 trillion over the next decade.Legal experts noted that while the Supreme Court restored the pay package, it did not overturn all of McCormick’s findings. “None of that was reversed in this decision,” Columbia Law School professor Dorothy Lund was quoted as saying by CNBC, referring to conclusions about Musk’s influence over Tesla.Lawyers representing the shareholder who brought the case said they were considering their next steps, reported AFP.
