A Delaware appeals court has overturned an earlier ruling that blocked Elon Musk from receiving a $56 billion compensation package from Tesla, clearing the way for the world’s richest man to claim the long-disputed award.
In a decision delivered on Friday, December 19, the Delaware Supreme Court set aside judgments issued by Chancellor Kathaleen McCormick of the Court of Chancery, effectively reviving the 2018 pay package that had previously been invalidated.
McCormick had ruled in 2024 that the approval process for the compensation was fundamentally flawed, describing Tesla’s board as overly influenced by Musk. Despite the package being endorsed by a majority of shareholders at the time, she ordered that it be rescinded in full.
However, the five-member appellate panel disagreed, ruling that the lower court erred by voiding the compensation entirely. The judges noted that Musk had fulfilled all performance requirements attached to the 2018 grant and that Tesla and its shareholders had benefited significantly from his leadership.
“It is undisputed that Musk fully performed under the 2018 grant, and Tesla and its stockholders were rewarded for his work,” the court stated.
The legal battle stemmed from a lawsuit filed by Tesla shareholder Richard Tornetta, who argued that the pay package was excessive, even though it had been approved by shareholders.
Following a five-day trial in January 2024, the Court of Chancery struck down the award, a position McCormick reaffirmed later that year after an initial appeal.
Throughout the dispute, Tesla’s board has remained firmly supportive of Musk. In August, directors approved an interim compensation arrangement valued at about $29 billion and later announced a new long-term package potentially worth up to $1 trillion, tied to ambitious performance and market value targets. On November 6, Tesla shareholders overwhelmingly backed the latest compensation plan.
Reacting to Friday’s ruling, lawyers representing Tesla shareholders said they were reviewing the judgment and considering possible next steps.