The Delaware supreme court has reinstated Elon Musk's controversial 2018 compensation package from Tesla, overturning a lower court ruling that had voided the deal as “unfathomable”. The package, originally valued at $56 billion, is now estimated to be worth as much as $139 billion, according to reports.
The decision, handed down on Friday, comes less than two months after Tesla shareholders approved a separate new plan that could be worth $1 trillion to Musk within a decade. Musk, already the world's richest person, has an estimated fortune of $600 billion.
The five justices ruled that rescinding the pay deal would be “inequitable” and would leave Musk “uncompensated for his time and efforts over a period of six years”. They agreed with an earlier finding of a breach of fiduciary duty, but ordered only $1 in nominal damages to the plaintiff.
The case originated seven years ago when a shareholder holding nine shares sued, arguing the package was designed to overpay Musk. After the initial ruling voided the deal, Musk relocated Tesla's incorporation from Delaware to Texas and publicly criticised Chancellor Kathaleen McCormick, who had struck down the package twice. In 2024, shareholders again voted to approve the 2018 package, but McCormick rejected it again.
At Tesla's annual meeting in Austin, Texas, in November, shareholders passed a stopgap measure to ensure Musk would receive the $56 billion regardless of the appeal outcome. Tesla did not respond to a request for comment.
Musk has encouraged other companies to leave Delaware, which hosts more than 60% of Fortune 500 companies, but only a few dozen have done so, including Dropbox and Coinbase. Meta has threatened to leave. To cash in either compensation package, Musk must meet goals including increasing Tesla's value to $8.5 trillion.
