The Delaware Supreme Court has reinstated Elon Musk’s 2018 Tesla compensation plan, reversing a lower-court ruling. The court overturned a 2024 decision that had voided Musk’s pay package, calling the earlier ruling improper and inequitable.
Court Reverses Lower Ruling, Restores Historic Pay Deal
The court said fully rescinding the deal unfairly left Musk “uncompensated” for his time and efforts over a period of six years. The compensation package, once valued at about $56 billion, is now worth roughly $139 billion based on Tesla’s stock price.
Reaction to the Decision
Musk reacted to the decision, writing that he was “vindicated.” Tesla shares ended the regular session down 0.45% at $481.20 and rose about 0.30% in after-hours trading.
Ownership and Control at Stake for Tesla CEO
If Musk exercises all stock options tied to the 2018 plan, his stake in Tesla would increase from about 12.4% to roughly 18.1% of the company’s expanded share base. Musk has repeatedly said that maintaining control over Tesla, rather than cash compensation, is his primary concern.
Background: Why the Pay Package Was Struck Down
In early 2024, a Delaware Chancery Court Judge ruled that Tesla’s directors were conflicted and failed to fully disclose key facts to shareholders when the pay plan was approved. The ruling sparked backlash from Musk, who accused Delaware judges of hostility toward tech founders.
Shareholder Support Influenced High Court Decision
The Supreme Court’s ruling comes after Tesla shareholders overwhelmingly approved a new Musk pay package in November, potentially worth up to $1 trillion if extreme market capitalization and operational targets are met. The compensation plan is designed to reward performance by tying pay to ambitious targets.
Key Takeaways
- The Delaware Supreme Court has reinstated Elon Musk’s $139 billion Tesla compensation package.
- The court overturned a 2024 decision that had voided Musk’s pay package.
- Musk’s stake in Tesla could increase to roughly 18.1% if he exercises all stock options tied to the 2018 plan.
- The compensation plan is designed to reward performance by tying pay to ambitious targets.