Delaware Court Restores Elon Musk's Tesla Pay Package

The Delaware Supreme Court on Friday reinstated Elon Musk's 2018 Tesla compensation package, a plan initially valued at about $56 billion when granted that a lower court voided in 2024 as unfathomable. In a 49-page decision, the justices overturned the rescission and left intact a framework designed to reward Musk for turning Tesla from a struggling startup into one of the world's most valuable companies. The package's current theoretical value is about $139 billion based on Tesla's stock price at the close of trading Friday, and Tesla shares were little changed in after-hours trading.

The Delaware Supreme Court said the remedy of total rescission would have left Musk uncompensated for his time and efforts over six years, undermining the incentive structure of the plan. The 2018 package granted Musk options to acquire about 304 million Tesla shares at a deeply discounted price if milestones were met, a stake that represented roughly 9% of Tesla’s outstanding stock. Musk never collected those options because the board faced a lawsuit from investor Richard Tornetta, who held nine Tesla shares when the plan was approved. In 2024, Delaware Judge Kathaleen McCormick concluded that Tesla’s directors were conflicted and key facts were hidden from shareholders when they approved the plan, and she ordered that the 2018 plan be rescinded.

Musk reacted on X, saying he was vindicated by the ruling.

The decision reduces the likelihood that the 2018 plan's reversal would trigger a near-term hit to Tesla’s profits and investor confidence, though it preserves a contentious precedent for executive pay in high-profile tech firms.

If the 2018 plan had been rescinded, Tesla could have faced about a $26 billion charge to profits over two years to account for replacement stock compensation promised to Musk, according to the court's assessment.

In November, Tesla shareholders approved a new pay package that could be worth as much as $878 billion if the company meets milestones for self-driving vehicles, a robotaxi network and sales of humanoid robots.

Tesla has moved its legal domicile to Texas, with governance provisions intended to curb litigation related to corporate-law issues. The Austin-based company is now incorporated in Texas, which allows it to require that any investor or group own 3% of the company before suing for alleged corporate-law violations.

Delaware remains the most popular home for U.S. public companies, and the ruling adds to ongoing debates about executive pay and corporate governance.

Tesla shares were up less than 1% in after-hours trading following the ruling.