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Delaware Supreme Court Hands Elon Musk $139 Billion Win in Tesla Pay Package Appeal

MarketDash Editorial Team
4 hours ago
Delaware's highest court reversed a lower court decision that voided Elon Musk's 2018 Tesla compensation plan, saying it was unfair to leave him uncompensated for six years of work. The package is now worth roughly $139 billion.

Court Says Original Ruling Was Too Harsh

Elon Musk just won back one of the biggest pay packages in corporate history. The Delaware Supreme Court on Friday overturned a 2024 ruling that had killed his 2018 Tesla Inc. (TSLA) compensation plan, finding that completely rescinding the deal was "improper and inequitable."

In a 49-page opinion, the court explained that leaving Musk entirely "uncompensated" for six years of work wasn't fair, even if the original approval process had flaws. The package was worth about $56 billion when it was granted. Today, based on where Tesla stock closed Friday, it's valued at roughly $139 billion.

Tesla shares ended regular trading down 0.45% at $481.20 and ticked up about 0.30% in after-hours trading. Musk's reaction on X was characteristically succinct: he said he felt "vindicated."

Why This Matters for Control of Tesla

This isn't really about the money for Musk. It's about control. If he exercises all the stock options tied to the 2018 plan, his stake in Tesla would jump from about 12.4% to roughly 18.1% of the company's expanded share base.

Musk has said repeatedly that maintaining voting power over Tesla is more important to him than cash compensation. Tesla's board has warned that Musk—who also runs SpaceX and artificial intelligence startup xAI—might walk away from the electric vehicle maker without greater control and performance-based incentives. When you're juggling multiple companies, equity and governance matter more than another billion in the bank.

What Happened in the Lower Court

So why was the pay package thrown out in the first place? In early 2024, Delaware Chancery Court Judge Kathaleen McCormick ruled after a five-day trial that Tesla's directors were conflicted and didn't fully disclose key facts to shareholders when the plan was approved back in 2018.

Musk didn't take that well. He accused Delaware judges of being hostile to tech founders and urged companies to reincorporate in other states. The decision sparked a broader conversation about whether Delaware—long the corporate home of choice for American companies—was still founder-friendly.

Shareholders Weighed In, and the High Court Listened

The Supreme Court's reversal comes after Tesla shareholders overwhelmingly approved a new Musk pay package in November. That one is even more ambitious, potentially worth up to $1 trillion if extreme market capitalization and operational targets are hit.

The compensation structure is designed to reward performance by tying payouts to ambitious milestones. But critics argue it could still allow Musk to collect massive sums by hitting minimum thresholds rather than delivering truly transformative results. It's a debate about what "performance-based" really means when the goalposts are set by the board and the targets, while ambitious, might not be as stretch as they appear.

For now, Musk has his 2018 package back, and Tesla shareholders seem comfortable with the arrangement. Whether that comfort holds as the company navigates increasing competition and regulatory scrutiny remains to be seen.

Back to News

Delaware Supreme Court Hands Elon Musk $139 Billion Win in Tesla Pay Package Appeal

MarketDash Editorial Team
4 hours ago
Delaware's highest court reversed a lower court decision that voided Elon Musk's 2018 Tesla compensation plan, saying it was unfair to leave him uncompensated for six years of work. The package is now worth roughly $139 billion.

Court Says Original Ruling Was Too Harsh

Elon Musk just won back one of the biggest pay packages in corporate history. The Delaware Supreme Court on Friday overturned a 2024 ruling that had killed his 2018 Tesla Inc. (TSLA) compensation plan, finding that completely rescinding the deal was "improper and inequitable."

In a 49-page opinion, the court explained that leaving Musk entirely "uncompensated" for six years of work wasn't fair, even if the original approval process had flaws. The package was worth about $56 billion when it was granted. Today, based on where Tesla stock closed Friday, it's valued at roughly $139 billion.

Tesla shares ended regular trading down 0.45% at $481.20 and ticked up about 0.30% in after-hours trading. Musk's reaction on X was characteristically succinct: he said he felt "vindicated."

Why This Matters for Control of Tesla

This isn't really about the money for Musk. It's about control. If he exercises all the stock options tied to the 2018 plan, his stake in Tesla would jump from about 12.4% to roughly 18.1% of the company's expanded share base.

Musk has said repeatedly that maintaining voting power over Tesla is more important to him than cash compensation. Tesla's board has warned that Musk—who also runs SpaceX and artificial intelligence startup xAI—might walk away from the electric vehicle maker without greater control and performance-based incentives. When you're juggling multiple companies, equity and governance matter more than another billion in the bank.

What Happened in the Lower Court

So why was the pay package thrown out in the first place? In early 2024, Delaware Chancery Court Judge Kathaleen McCormick ruled after a five-day trial that Tesla's directors were conflicted and didn't fully disclose key facts to shareholders when the plan was approved back in 2018.

Musk didn't take that well. He accused Delaware judges of being hostile to tech founders and urged companies to reincorporate in other states. The decision sparked a broader conversation about whether Delaware—long the corporate home of choice for American companies—was still founder-friendly.

Shareholders Weighed In, and the High Court Listened

The Supreme Court's reversal comes after Tesla shareholders overwhelmingly approved a new Musk pay package in November. That one is even more ambitious, potentially worth up to $1 trillion if extreme market capitalization and operational targets are hit.

The compensation structure is designed to reward performance by tying payouts to ambitious milestones. But critics argue it could still allow Musk to collect massive sums by hitting minimum thresholds rather than delivering truly transformative results. It's a debate about what "performance-based" really means when the goalposts are set by the board and the targets, while ambitious, might not be as stretch as they appear.

For now, Musk has his 2018 package back, and Tesla shareholders seem comfortable with the arrangement. Whether that comfort holds as the company navigates increasing competition and regulatory scrutiny remains to be seen.