In a historic turnaround, the Delaware Supreme Court reinstated Tesla CEO Elon Musk’s 2018 compensation plan on Friday, December 19.
The deal is now valued at around $139 billion. The ruling overturns a 2024 lower court ruling that struck down the compensation plan, calling it “unfathomable.”
With this decision, a year-long battle began when a shareholder holding just nine Tesla shares challenged the plan.
In her 2024 ruling, Delaware Court of Chancellor Kathaleen McCormick found that Tesla’s board failed to prove that the mass award was fair to shareholders, citing conflicts of interest and a lack of full disclosure.
However, the state’s highest court disagreed, saying in a 49-page opinion that voiding the package entirely was “unfair” and “leaves Musk without compensation for his time and efforts over a six-year period.”
The 2018 program grants Musk stock options allowing him to purchase approximately 304 million Tesla shares at a deeply discounted price if the company meets ambitious financial and operational goals (all of which the company has achieved).
The legal battle had significant repercussions. Musk, angered by the initial cancellation of his salary, launched a fierce campaign against Delaware’s corporate legal system, calling it hostile to business and urging companies to incorporate elsewhere.
Various high-profile companies such as Coinbase and Roblox have thus moved their legal domiciles to states like Texas and Nevada.
Musk celebrated the decision on his social media platform X (formerly Twitter), saying he had been “vindicated.”
After hours trading, Tesla shares were up slightly.
The reinstatement of the 2018 plan comes just weeks after Tesla shareholders approved a new, even bigger compensation plan for Musk in November.
This package could be worth as much as $878 billion if the company achieves its extraordinary growth goals over the next decade.
Lawyers for the shareholder who initially challenged the 2018 deal said they were “considering our next steps” and remained “proud to have participated in the historic verdict below.”
The Supreme Court’s decision solidifies Musk’s position as the world’s richest person, as that title is largely based on his holdings in Tesla and SpaceX.
