Delaware Supreme Court Upholds Elon Musk’s $56B Tesla Compensation Package
The Delaware Supreme Court has upheld Elon Musk’s substantial $56 billion Tesla compensation package from 2018. This decision, announced on Friday, overturned a prior ruling made by the state’s Chancery Court.
Details of the Court’s Ruling
The ruling was unanimous, with justices stating that rescinding Musk’s pay package left him “uncompensated for his time and efforts over a period of six years.” This package, adjusted for Tesla’s soaring stock prices, is now estimated to be worth approximately $140 billion.
Impact of the Decision
This verdict marks the conclusion of a lengthy legal battle that influenced Musk’s decision to relocate Tesla’s incorporation from Delaware to Texas. This shift prompted several other companies to consider similar moves.
- Musk expressed his satisfaction on social media, stating he felt “vindicated.”
- He thanked his supporters, specifically acknowledging a vocal shareholder known as “TeslaBoomerMama.”
Revisions to Compensation Packages
In light of the court’s ruling, Tesla is expected to retract a previously proposed $29 billion pay package for Musk. This package was created as a safeguard against the uncertainty surrounding the appeal of the Delaware Supreme Court decision.
It is important to note that Musk’s $1 trillion compensation package awarded in November 2024 remains intact. This grant requires Musk to achieve significant milestones to access its full value.
Background of the Legal Dispute
The 2018 compensation plan outlined specific goals for Musk, all of which he met. However, the package faced legal scrutiny when a shareholder filed a lawsuit in 2018. The plaintiff, Richard Tornetta, a former corporate lawyer and heavy metal drummer, claimed the negotiations were flawed, arguing that shareholders were not adequately informed about conflicts of interest. Notably, Tornetta held only nine shares of Tesla stock.
After a prolonged legal process, including Musk’s testimony, the Chancery Court initially ruled against the pay package in January 2024. Although Tesla shareholders voted to reaffirm the compensation at their annual meeting later that year, the judge upheld her earlier decision in December. Following that, Tesla filed an appeal.
