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Elon Musk has scored a major legal win after Delaware’s Supreme Court overturned earlier rulings that blocked his controversial $56 billion Tesla compensation package, effectively reopening the door for the electric vehicle maker’s chief executive to claim one of the biggest pay awards in corporate history.
In its decision delivered on Friday, the five-member appeals panel set aside two judgments issued by Chancellor Kathaleen McCormick of the Delaware Court of Chancery, bringing a dramatic twist to a case that has dragged on for years.
The court held that McCormick acted improperly when she ordered a full rescission of Musk’s 2018 pay package, noting that the Tesla boss had already fulfilled the terms tied to the award.
“It is undisputed that Musk fully performed under the 2018 grant, and Tesla and its stockholders were rewarded for his work,” the justices said in their ruling, reversing the earlier decision.
The pay deal, first approved in 2018 by a majority of Tesla shareholders, later became the subject of intense legal scrutiny after investor Richard Tornetta filed a suit, arguing that the package was excessive and unfair.
In January 2024, following a five-day trial, the Court of Chancery struck down the award, describing the approval process as “deeply flawed.” McCormick faulted Tesla’s board for what she described as vulnerability to Musk’s influence, referring to him as the “paradigmatic ‘Superstar CEO.’” She reaffirmed that position in December 2024.
Friday’s ruling, however, shifts the balance firmly in Musk’s favour, clearing a significant legal hurdle for the world’s richest person and delivering a fresh boost to Tesla’s leadership.
Reacting to the decision, lawyers representing Tesla shareholders said in an online statement that they were reviewing the judgment and weighing their next steps.
Throughout the legal battle, Tesla’s board has stood firmly behind Musk. In August, the company approved an “interim” compensation package estimated at about $29 billion and later unveiled an even more ambitious plan that could be worth up to $1 trillion if performance and valuation targets are met.
Tesla shareholders on November 6 overwhelmingly endorsed the latest pay package, once again backing Musk as the company’s driving force and signalling continued confidence in his leadership and vision.
