Is it a victory for perseverance or high-profile influence? After two court rejections, Elon Musk has finally won his long-disputed pay-check of $56 billion (€47 billion), which was confirmed to him seven years ago by his majority shareholders.
The Delaware Supreme Court has reinstated one of the highest awards for a CEO in automotive history, after a minority shareholder previously objected and took it to court. Meanwhile, the remuneration has tripled in value.
The Delaware Supreme Court last week reinstated the massive compensation package awarded to Tesla CEO Elon Musk in 2018. A long legal fight that had twice stripped the award from the company’s leader has come to an end, with Elon Musk handed the final win.
The new ruling restores Musk’s right to roughly 304 million Tesla shares, which are now valued at more than $140 billion (€120 billion) after a sharp rise in the automaker’s stock, or triple the original value. The wealthiest man in the world has become even richer.
Compensation deserved
In January 2024, a lower Delaware judge blocked the award following a lawsuit by a minority shareholder. That judge found that Tesla’s board failed to disclose Musk’s influence over the pay negotiations adequately and was too closely aligned with him to function independently. The Supreme Court now disagreed and concluded that canceling the entire pay scheme went too far.
The judges said Musk deserved compensation for his years of work tied to Tesla’s rise and success. Because the plaintiffs sought only complete cancellation rather than a reduced payout, the court said it was left with an all-or-nothing choice. It chose to reinstate the package. However, it imposed a symbolic $1 penalty on Musk and allowed plaintiffs’ attorneys to recover fees expected to reach several million.
The decision restores what was already one of the most oversized executive pay packages in US corporate history. When shareholders approved it in 2018, Musk’s award was valued at about $56 billion and structured into 12 sections linked to goals such as revenue and profit milestones. Tesla surpassed those benchmarks years ahead of schedule, fueling a dramatic increase in the value of the shares tied to the plan.
From Delaware to Texas
The ruling also closes a turbulent chapter for Tesla’s legal home. After the initial court rejection, Musk pushed to move Tesla’s corporate headquarters out of Delaware, a state long favored by US companies for its business-friendly courts.
Shareholders approved the relocation to Austin, Texas. They also voted a second time, reaffirming the 2018 pay package. The same lower court later rejected that vote. During the legal standoff, Tesla granted Musk a conditional replacement award of 96 million shares. With the Supreme Court’s ruling, that interim grant falls away.
For Musk, already the world’s richest individual, the ruling cements a personal financial windfall. For Tesla, it raises questions about board independence. But after the one trillion pay package, which shareholders approved at the beginning of November, extraordinary pay linked to its CEO has become a trademark feature for the carmaker.
