Elon Musk secured a court victory on Friday. The Delaware Supreme Court restored his 2018 Tesla pay package without any restrictions. The decision reversed a lower-court ruling from 2024.
The restored plan once carried a $56 billion estimate. Based on Tesla’s Friday close, the package stands near $139 billion. Musk posted on X that he felt “vindicated.”
Tesla shares rose less than 1% in after-hours trading. Tesla did not issue an immediate public comment. Lawyers who challenged the award said they weighed next steps.
The Delaware Supreme Court said the lower court handled the remedy incorrectly. The justices rejected total rescission as an unfair outcome. They wrote that rescission left Musk unpaid for six years.
The court issued a 49-page opinion on Friday. The ruling restored the 2018 stock option plan in full. It also overturned the 2024 decision that struck the package down.
Delaware Judge Kathaleen McCormick canceled the award after a five-day trial. She found conflicts among directors and gaps in shareholder disclosures. Investor Richard Tornetta brought the case while holding nine Tesla shares.
The Supreme Court did not accept total cancellation as an equitable fix. The court said the remedy treated Elon Musk inequitably after years of work. Consequently, the decision reinstated the options and ended the rescission order.
The 2018 plan offered Musk options for about 304 million Tesla shares. The options carried a discounted strike price tied to performance goals. Tesla later met the operational and market-cap milestones in the plan.
Those options represent about 9% of Tesla’s outstanding stock. If Musk exercises the full grant, his stake rises sharply. His ownership could increase from about 12.4% to roughly 18.1%.
The larger stake matters because Musk prioritizes control at Tesla. He has said influence ranks above compensation in his decision-making. Besides, he has warned that he could step back without more voting power.
Gene Munster of Deepwater Asset Management said the ruling speeds up control. Meanwhile, Tesla prepared for a costly accounting outcome if it lost. The company said an adverse outcome could force a $26 billion profit hit.
Shareholders also approved a newer compensation plan in November. That plan could reach $878 billion if Tesla meets aggressive targets. Those targets cover self-driving progress, robotaxi goals, and humanoid robot sales.
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The 2024 trial decision triggered sharp criticism from Musk and allies. Musk accused Delaware judges of activism against tech founders. He urged companies to reincorporate outside Delaware.
Some public companies later moved their legal home to Texas or Nevada. Dropbox, Roblox, The Trade Desk, and Coinbase took that step. However, Delaware still remains the most common incorporation state.
Tesla has already reincorporated in Texas. Texas law allows stricter thresholds for some shareholder lawsuits. Tesla can require a 3% ownership stake before certain suits proceed.
A 3% Tesla stake would cost about $30 billion at current values. That bar limits legal challenges to the largest holders. Musk stands as the only individual with that much Tesla stock.
Brian Dunn of Cornell’s Institute for Compensation Studies discussed the shareholder vote factor. He said courts often avoid overruling shareholder decisions. Additionally, shareholders had overwhelmingly supported Musk’s compensation framework.
The Supreme Court ruling brings the 2018 package back into effect. It also closes a major legal block that kept Musk from exercising options. Investors now refocus on Tesla’s performance targets and governance structure.