Delaware Supreme Court Restores Elon Musk's Tesla Pay Package Worth $140 Billion
The Delaware Supreme Court restored Elon Musk's 2018 Tesla pay package on December 19, 2025. The unanimous decision reversed a lower court ruling that had canceled the compensation plan. According to CNBC, the package was originally worth $56 billion when approved but now valued at approximately $140 billion based on current Tesla stock prices.
The Supreme Court found that complete cancellation of the pay package was too extreme. The judges stated that eliminating the compensation left Musk without payment for six years of work. The court awarded nominal damages of $1 instead. Shareholder Richard Tornetta filed the original lawsuit in 2018, arguing the board improperly negotiated the package.
Impact on Tesla and Future Compensation
The ruling resolves a legal dispute that began in 2018 when shareholders challenged the compensation structure. Tesla shareholders approved the package twice, once in 2018 and again in 2024. Delaware Chancery Court Chancellor Kathaleen McCormick rejected both approvals, finding the package unfair to shareholders despite the votes.
Tesla had prepared a contingency plan worth $29 billion in case the appeal failed. That backup compensation will now be revoked. The company approved a separate $1 trillion pay package in November 2025 that remains in effect. That newer plan requires Tesla to meet performance targets over the next decade.
Effects on Corporate Governance and Delaware's Position
The decision arrives during turbulence in Delaware corporate law. According to the Harvard Law School Forum on Corporate Governance, Delaware enacted Senate Bill 21 in March 2025 to address concerns about judicial oversight. The legislation was fast-tracked after companies including Tesla, Dropbox, and Roblox moved their incorporations to Nevada and Texas.
The restoration of Musk's pay package contrasts with broader executive compensation trends. The Equilar and Associated Press CEO Pay Study found median S&P 500 CEO compensation was $17.1 million in 2024, a 9.7% increase from the previous year. Musk's package dwarfs typical CEO awards by thousands of times.
Delaware derives substantial revenue from corporate franchise fees and taxes. Over 60% of Fortune 500 companies remain incorporated in the state. However, the outcry following the initial Chancery Court decision damaged Delaware's reputation for predictability in corporate law. Several controlled companies cited concerns about hostile treatment of controlling shareholders when announcing departures.
Further Reading
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