A Delaware court has reinstated Elon Musk’s controversial 2018 Tesla pay package, which was initially invalidated by a lower court two years ago. The original $56 billion deal could now be worth as much as $139 billion, according to the New York Times. This ruling follows the approval of a new compensation plan by Tesla shareholders that could make Musk up to $1 trillion over the next decade, on top of his current estimated fortune of $600 billion.
The Delaware Supreme Court ruled that canceling the pay package would be “inequitable” and would leave Musk “uncompensated for his time and efforts over a period of six years.” This decision mirrors arguments from Tesla’s board members, who supported the reinstatement of the deal.
Shareholders had already approved a backup plan at Tesla’s annual meeting in Austin, Texas, in November, which ensures Musk receives his $56 billion regardless of the court’s decision.
Both the original pay package and the new one require Musk to meet high-performance targets related to product development and increasing Tesla’s value to $8.5 trillion for him to fully benefit.
The legal battle began seven years ago when a Tesla shareholder, who held only nine shares, filed a lawsuit claiming the compensation plan excessively rewarded Musk. A lower court ruling invalidated the deal, sparking Musk’s displeasure. He relocated Tesla from Delaware to Texas and publicly criticized the state’s court system, particularly Chancellor Kathaleen McCormick, whom he accused of damaging Delaware’s reputation.
In 2024, shareholders were asked to vote again on Musk’s pay package. While they approved it once more, McCormick struck it down again, asserting that Musk had too much influence over the creation of his own compensation plan and that shareholders were not adequately informed.
Musk has expressed frustration with Delaware’s court system, even suggesting that companies should consider leaving the state, which traditionally hosts over 60% of Fortune 500 companies. Though some companies, such as Dropbox and Coinbase, have followed Musk’s advice, other major tech firms like Meta have only considered leaving.
In Friday’s opinion, the justices agreed with McCormick’s findings regarding the breach of fiduciary duty in creating the original deal but concluded that rescinding Musk’s entire pay package was inappropriate. They awarded the plaintiff just $1 in nominal damages.
