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

The Delaware Supreme Court has officially reinstated Elon Musk’s 2018 Tesla compensation package, overturning a lower court’s decision to void the historic pay deal. The ruling, delivered on (December 19, 2025), ends a years-long legal battle over executive compensation and corporate governance.

The Supreme Court’s Decision

In a unanimous decision, the state’s high court reversed the 2024 ruling by Chancellor Kathaleen McCormick, which had struck down the package as "unfathomable" and the product of a conflicted board. The Supreme Court justices argued that completely rescinding the pay package was an "improper and inequitable" remedy.

The court’s opinion emphasized that voiding the contract would leave Musk "uncompensated for his time and efforts over a period of six years" during which Tesla’s market value grew exponentially. While the court acknowledged procedural issues raised in the initial lawsuit, it concluded that stripping Musk of the agreed-upon compensation was too harsh a penalty. Instead, the court awarded the plaintiff, a shareholder holding nine shares, nominal damages of $1.

Financial Impact and Current Value

While the package was famously valued at $56 billion when the legal challenges began, the actual value of the stock options has fluctuated significantly with Tesla’s share price.

1. Original 2018 Valuation: ~$2.3 billion (grant date fair value).
2. Value at Time of Voiding (2024): ~$56 billion.
3. Estimated Current Value: Approximately $139 billion, according to recent financial reports.

The reinstatement means Musk retains options to purchase roughly 304 million Tesla shares at a steep discount, cementing his status as the world’s richest person with a net worth now estimated between $600 billion and $679 billion.

Background of the Dispute

The legal saga began when shareholder Richard Tornetta sued Tesla’s board in 2018, arguing they breached their fiduciary duty by approving a pay package that was excessive and dictated by Musk himself. After a trial in early 2024, Judge McCormick agreed, leading to the package's cancellation.

Following that loss, Musk heavily criticized the Delaware legal system and successfully campaigned to move Tesla’s legal incorporation from Delaware to Texas. He also rallied shareholders to re-approve the 2018 package in a defiant June 2024 vote, signaling strong investor support despite the court’s initial findings.

What This Means for Tesla

The ruling is a significant victory for Musk and Tesla’s board, validating their argument that the CEO's compensation was justified by the company's "extraordinary" growth. In a post on X (formerly Twitter) shortly after the ruling, Musk wrote simply that he felt "vindicated."

The decision clears the path for Tesla to focus on its next ambitious goals. Shareholders recently approved a new, separate compensation plan for Musk potentially worth up to $1 trillion over the next decade, contingent on hitting targets related to autonomous driving and robotics.

Sources

1. Alpha Spread: Elon Musk's $56 Billion Tesla Pay Package Restored by Delaware Supreme Court
2. The Guardian: Elon Musk’s massive 2018 Tesla pay package restored by Delaware court
3. AP News: Tesla CEO Elon Musk recovers $55 billion pay package in Delaware court ruling
4. Washington Post: Court restores Elon Musk’s disputed $56 billion Tesla payday