In a landmark turn, the Delaware Supreme Court on Friday, December 19, 2018 restored the compensation package for Tesla CEO Elon Musk.
The deal is now valued at around $139 billion. The ruling overturns a 2024 ruling that had voided the wage plan as “unfathomable.”
With this decision, a year-long battle that started when a shareholder with only nine Tesla shares challenged the package.
In her 2024 ruling, Delaware Chancery Court Chancellor Kathaleen McCormick found that Tesla’s board had failed to prove that the massive price was fair to shareholders, citing conflicts of interest and a lack of full disclosure.
However, the state’s highest court disagreed, stating in a 49-page opinion that completely voiding the package was “unjust” and “leaves Musk uncompensated for his time and effort over a period of six years.”
The 2018 package gives Musk stock options to buy about 304 million Tesla shares at a steep discount if the company hits ambitious financial and operational milestones (all of which it has achieved).
The legal battle had significant consequences. Musk, outraged by the initial cancellation of his salary, launched a fierce campaign against Delaware’s legal system, calling it anti-business and urging companies to incorporate elsewhere.
As a result, various high-profile companies like Coinbase and Roblox moved their legal homes to states like Texas and Nevada.
Musk celebrated the verdict on his social media platform X (formerly Twitter), writing that he was “vindicated”.
In after-hours trading, Tesla shares rose slightly.
The reinstatement of the 2018 package comes just weeks after Tesla shareholders approved a new, even bigger compensation plan for Musk in November.
That package could be worth up to $878 billion if the company meets extraordinary growth targets over the next decade.
Lawyers for the shareholder that originally challenged the 2018 deal said they were “considering our next steps” and remained “proud to have participated in the historic judgment below.”
The Supreme Court ruling solidifies Musk’s position as the world’s richest person, a title largely built on his Tesla and SpaceX holdings.
