Delaware Supreme Court Reinstates Elon Musk's $56 Billion Tesla Pay Package

The Delaware Supreme Court has ruled that Elon Musk’s 2018 Tesla CEO pay package, worth approximately $56 billion, must be restored, overturning a lower court’s decision to cancel the compensation plan.

CNBC reports that the Delaware Supreme Court has reversed a lower court’s decision to rescind Elon Musk’s 2018 CEO pay package from Tesla, which was valued at around $56 billion when it vested. The judges stated that the cancellation of Musk’s pay plan by the Court of Chancery was an overly extreme remedy and that the lower court failed to provide Tesla with an opportunity to determine fair compensation.

The decision likely concludes the lengthy legal battle over Musk’s record-setting compensation, known as the Tornetta v. Musk case. The case was brought by shareholder Richard J. Tornetta, who accused Musk and the Tesla board of breaching their fiduciary duties.

While the Friday opinion restores Musk’s 2018 pay plan, it leaves the rest of the lower court’s decision unaddressed and intact, according to Dorothy Lund, a professor at Columbia Law School. The court had previously determined that Musk was a controlling shareholder of Tesla and that he and the Tesla board had arranged an unfair pay plan for him.

Musk’s 2018 CEO pay package from Tesla, consisting of 12 milestone-based tranches of stock, was unprecedented at the time it was proposed. The pay plan made Musk the wealthiest individual in the world after it was granted. Musk’s current net worth is estimated at approximately $679.4 billion, according to the Forbes Real Time Billionaires List.

In January 2024, the Delaware Court of Chancery, which specializes in business matters, ruled that the pay plan was improperly granted and ordered its rescission. Chancellor Kathaleen McCormick found that Musk “controlled Tesla” and that the process leading to the board’s approval of his 2018 pay plan was “deeply flawed.” The court also determined that the Tesla board did not disclose all the material information they should have to investors before asking them to vote on and approve the plan.

Breitbart News previously reported that McCormick criticized Tesla’s “self-driving process,” a play on words based on the company’s self-driving technology:

In her decision, McCormick asked: “Was the richest person in the world overpaid? The stockholder plaintiff in this derivative lawsuit says so. He claims that Tesla, Inc.’s directors breached their fiduciary duties by awarding Elon Musk a performance-based equity-compensation plan.”

McCormick continued: “In the final analysis, Musk launched a self-driving process, recalibrating the speed and direction along the way as he saw fit. The process arrived at an unfair price. And through this litigation, the plaintiff requests a recall.”

Following the earlier Tornetta ruling, Musk moved Tesla’s site of incorporation out of Delaware and called for other entrepreneurs to reincorporate outside of the state. Tesla also attempted to “ratify” the 2018 CEO pay plan by holding a second shareholder vote in 2024.

The pay plan’s restoration means Musk adds more wealth to his massive fortune, but it pales in comparison to the new pay plan recently approved by Tesla shareholders. Breitbart News previously reported it has the potential to pay Musk $1 trillion:

Tesla shareholders have given their stamp of approval to CEO Elon Musk’s unprecedented pay plan, which could potentially be worth close to $1 trillion. The electric vehicle manufacturer revealed that the proposal garnered the support of 75 percent of the voting shares during the company’s annual shareholders meeting held in Austin, Texas.

The pay package, introduced by the Tesla board in September, consists of 12 tranches of shares that will be granted to Musk upon the company achieving certain milestones over the next decade. If all targets are met, Musk’s ownership in Tesla would increase from approximately 13 percent to 25 percent, adding more than 423 million shares to his current holdings. This move also grants Musk increased voting power over the company, fulfilling demands he had publicly made since early 2024.