Delaware Supreme Court reinstates Musk's $56B Tesla pay package
What's the story
The Delaware Supreme Court has reinstated Elon Musk's $56 billion pay package from 2018. The decision overturns a previous ruling by the state's Chancery Court. The judges unanimously agreed that revoking Musk's package left him "uncompensated for his time and efforts over a period of six years." Adjusted for Tesla's current stock price, which hit record highs this week, the reinstated package would be worth around $140 billion, according to Bloomberg.
Reaction
Musk's response to court's decision
In response to the news, Musk took to X and said he felt "vindicated." He also thanked his supporters for their unwavering support. The Delaware Supreme Court's decision likely ends a protracted legal battle that had prompted Musk to shift Tesla's incorporation from Delaware to Texas, leading other companies to do the same.
Strategy
Tesla's future plans post-court ruling
Following the court's decision, Tesla is likely to revoke a $29 billion pay package it had offered Musk earlier this year. The package was intended as a safeguard against the possibility of losing the Delaware Supreme Court appeal. However, this isn't the same as the $1 trillion compensation package awarded to Musk in November, which will remain intact and continue to exist going forward.
Milestones
The 2018 pay package and its challenges
The 2018 pay package also laid out a number of milestones that Musk had to hit to unlock the full value. Although he and Tesla met all those goals, a shareholder had filed a suit over the award in 2018. The plaintiff argued that it was improperly negotiated and shareholders weren't properly informed of the conflicts of interest at play.
Re-approval
Tesla's annual meeting and court's confirmation
Despite the lawsuit, Tesla held a vote at its 2024 annual meeting where shareholders "re-approved" the package. However, the judge overseeing the case confirmed her decision in December 2024. Tesla appealed soon after. The Delaware Supreme Court found several errors in McCormick's 2024 ruling and ordered that the 2018 pay package be reinstated. It also awarded Tesla $1 in nominal damages for its legal costs.