A Delaware appeals court on Friday, December 19, has cleared the way for Elon Musk to receive his long-contested $56 billion Tesla compensation package, overturning an earlier ruling that had invalidated the award.
In a unanimous decision, the Delaware Supreme Court rejected two judgments delivered by Chancellor Kathaleen McCormick of the Delaware Court of Chancery, effectively reopening the path for the world’s richest individual to collect the pay package.
McCormick had struck down the 2018 compensation plan in rulings delivered in 2024, describing the approval process as deeply flawed and ordering the award to be rescinded despite majority approval by Tesla shareholders.
However, the five-judge appeals panel ruled that the chancellor erred in voiding the package entirely, noting that Musk had fulfilled the performance requirements tied to the award.
“It is undisputed that Musk fully performed under the 2018 grant, and Tesla and its stockholders were rewarded for his work,” the court stated.
The legal battle began after Tesla shareholder Richard Tornetta filed a lawsuit challenging the compensation as excessive, even though it had received shareholder backing.
Following a five-day trial in January 2024, the Court of Chancery nullified the award, with McCormick stating that Tesla’s board was susceptible to manipulation by Elon Musk, whom she described as a “paradigmatic superstar chief executive.” She reaffirmed that stance in December 2024 after an initial appeal.
Throughout the dispute, Tesla’s board has remained firmly in Elon Musk’s corner. In August, directors approved an interim compensation award estimated at $29 billion, before unveiling a new pay package valued at up to $1 trillion. On November 6, Tesla shareholders overwhelmingly approved the latest plan, which is tied to performance and valuation benchmarks.
Lawyers representing Tesla shareholders said in an online statement on Friday that they are reviewing the ruling and considering their next steps.
