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Elon Musk’s 2018 Tesla Pay Package Reinstated by Delaware Supreme Court
The Delaware Supreme Court has reinstated Tesla CEO Elon Musk’s 2018 compensation package. The 2018 agreement originally authorized options for roughly 304 million shares upon Tesla achieving a series of revenue and market‑value milestones. It was worth around $56 billion when shareholders approved it, but the surge in Tesla’s share price means the award could be worth about $139 billion today.
The state’s highest court ruled on Friday that Chancellor Kathaleen McCormick’s 2024 decision to rescind the pay arrangement was “improper and inequitable” because it left Musk uncompensated for six years of leadership. In its opinion, the justices said rescission “leaves Musk uncompensated for his time and efforts over a period of six years,” echoing arguments from Tesla’s board. The judges restored the agreement and ordered $1 in nominal damages to the shareholder who filed the lawsuit.
Background of the Legal Dispute and Board Relations
A Tesla shareholder filed a case in 2019 contending that the 2018 compensation plan overpaid the “superstar CEO” and that the company’s board was too close to Musk. The shareholder, Richard Tornetta, owned just nine shares. During a 2022 trial, evidence suggested the board crafted the incentive plan under Musk’s influence and that investors lacked complete information when voting on it.
Chancellor McCormick agreed with the plaintiff in January 2024 and voided the package. Her decision prompted Musk to move Tesla’s state of incorporation from Delaware to Texas and to criticize Delaware’s legal system.
After the rescission, Tesla’s directors sought to placate their chief executive. They persuaded shareholders to ratify the compensation plan a second time in mid‑2024, when the award’s value had fallen to about $44.9 billion.
Despite that vote, McCormick rejected the package again. Tesla appealed, and the Supreme Court’s ruling overturned her decision, finding that complete rescission was excessive. The high court acknowledged that there were fiduciary issues but said it had to choose between “giving Musk everything or nothing” because the plaintiffs did not propose a partial remedy.
Also Read: Delaware Supreme Court Restores Elon Musk’s 2018 Tesla Pay Package
New Compensation Proposals and Impact on Tesla
Musk’s regained package adds to his status as the world’s richest individual. According to The Guardian, his net worth is around $600 billion. The Associated Press notes that the reinstated award boosts his fortune to roughly $679 billion. Tesla’s board has not responded publicly to the ruling.
Even with the reinstated plan, Tesla is pursuing an even bigger incentive scheme. In November 2025, shareholders approved a new compensation plan that could reward Musk with up to $1 trillion in stock if he lifts the company’s market value from about $1.6 trillion to $8.5 trillion over the next decade.
The earlier 2018 plan appeared ambitious when drafted; at the time, Tesla’s valuation hovered between $50 billion and $75 billion. As production problems eased, Tesla met demand for its electric vehicles, boosting revenue and share price enough for Musk to achieve all the targets.
The long‑running dispute has affected Delaware’s reputation as a corporate haven. Musk’s relocation of Tesla and SpaceX to Texas and his online statements urging companies to leave Delaware have sparked concern that other businesses might follow. While some firms, including Dropbox and Coinbase, have reincorporated elsewhere, Delaware officials maintain that the state remains the premier jurisdiction for US corporations.
Analysts say the case underscores the influence of shareholder votes and the courts in executive compensation. The reinstated award highlights how performance‑based pay can yield enormous payouts when a company surpasses expectations. Tesla’s continued pursuit of even larger compensation plans suggests that the automaker wants to keep Musk focused on ambitious growth targets while retaining investor support.
