Delaware Supreme Court restores Musk’s 2018 Tesla pay package
Musk’s pay deal now valued at $155 billion due to stock price rise
Tesla’s new pay plan could reach $878 billion if targets are met
By Tom Hals
WILMINGTON, Delaware, Dec 19 (Reuters) -
Elon Musk’s 2018 pay package from Tesla (TSLA.O) , once worth $56 billion, was restored by the Delaware Supreme Court on Friday, two years after a lower court struck down the compensation deal as “unfathomable.”
The ruling overturns a decision that had prompted a furious backlash from Musk and damaged Delaware’s business-friendly reputation. “We agree that rescission was an improper remedy,” the five judges on the court said in a 49-page ruling.
The court said a judge’s rescission of the pay package in 2024 had been “inequitable.” The remedy of total rescission “leaves Musk uncompensated for his time and efforts over a period of six years,” the court said.
Tesla did not immediately respond to a request for comment. Musk posted on X that he was “vindicated.” The pay package was by far the largest ever until Tesla shareholders approved a new, even larger pay plan in November. The ruling means that Musk can finally get paid for his work since 2018, when he transformed Tesla from a struggling startup to one of the world’s most valuable companies. If Tesla’s appeal had failed, it could have to account for the replacement stock-compensation package it had promised Musk – at today’s much higher stock price.
The 2018 pay deal provided Musk options to acquire about 304 million Tesla shares at a deeply discounted price if the company hit various milestones, which it did. Tesla estimated in 2018 that the plan was potentially worth $56 billion, although it is now worth about $155 billion due to the continued increase in the EV maker’s stock price. The options represent around 9% of Tesla’s outstanding stock. Musk never collected his stock options because soon after shareholders approved the 2018 compensation, the board was sued by Richard Tornetta, an investor with just nine Tesla shares.
In 2024, after a five-day trial, Delaware Judge Kathaleen McCormick concluded that Tesla’s directors were conflicted and key facts were hidden from shareholders when they voted to approve the plan. She ordered that the 2018 plan be rescinded.
Musk accused Delaware judges of being activists who are hostile to tech founders and he urged businesses to follow Tesla and reincorporate elsewhere. Dropbox (DBX.O) , Roblox (RBLX.N) , Trade Desk (TTD.O) and Coinbase (COIN.O) were among the handful of large companies that moved their legal homes to Nevada or Texas. However, Delaware remains by far the most popular legal home for U.S. public companies.
Tesla’s board warned that Musk, the world’s richest person who also leads the SpaceX rocket venture and artificial intelligence startup xAI, could leave the electric car company if he did not get the pay he wanted and an increase in his voting power.
In November, shareholders approved a new pay package that could be worth $878 billion if Tesla meets targets for self-driving vehicles, a robotaxi network and sales of humanoid robots.
Tesla has taken steps to reduce the risk that a shareholder could tie up the 2025 package in the courts.
The Austin-based company is now incorporated in Texas, which allows Tesla to require that any investor or group of investors must own 3% of the company stock before suing for an alleged corporate law violation. A stake of that size would be worth around $30 billion and Musk is the only individual with that much stock.

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The Delaware Supreme Court has restored Elon Musk's 2018 Tesla pay package, now valued at $155 billion due to the rise in Tesla's stock price. This overturns a lower court's decision to rescind the deal. The ruling allows Musk to be compensated for his work since 2018. Tesla's new pay plan could be worth $878 billion if targets are met.

- The Delaware Supreme Court restored Elon Musk's 2018 Tesla pay package, valued at approximately $155 billion due to rising stock prices.  
- The court deemed a previous ruling that rescinded the pay deal as inequitable, highlighting the significance of Musk's contributions to Tesla's transformation into a leading company.  
- The ruling allows Musk to potentially benefit from a new pay plan that could reach $878 billion if Tesla achieves specified targets related to innovation and sales.

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Musk wins appeal that restores 2018 Tesla pay deal now worth about $155 billion