Elon Musk’s $55 Billion Tesla Compensation Restored by Delaware Supreme Court
Elon Musk, the wealthiest individual globally, has seen a significant increase in his fortune following the Delaware Supreme Court’s decision to restore a $55 billion compensation package granted by Tesla in 2018. This reversal comes after a prior decision by Chancellor Kathaleen St. Jude McCormick in January 2024, which had revoked the pay package due to a lawsuit initiated by a Tesla shareholder.
While Tesla has not yet commented on the recent court decision, the restoration of Musk’s 2018 compensation aligns with his belief that the initial ruling was an overreach by the Delaware legal system. This belief led Musk to move Tesla’s incorporation from Delaware to Texas, causing the company to reassure its CEO by reaffirming the pay package, valued at $44.9 billion during a shareholder vote 18 months ago.
Despite these efforts, Musk’s dissatisfaction prompted Tesla to propose an even more ambitious compensation plan. This new package, approved by shareholders last month, could potentially reward Musk with up to $1 trillion if he successfully elevates Tesla’s market value from its current $1.6 trillion to $8.5 trillion over the next decade.
The 2018 pay package seemed like a daunting target when it was initially proposed. At that time, Tesla’s market value ranged between $50 billion and $75 billion, and the company was facing production challenges and financial strain. However, improvements in production and increased demand for Tesla’s electric vehicles eventually led to a surge in sales and stock prices, allowing Musk to meet the conditions for the payout.
Chancellor McCormick’s 2024 decision to rescind the package was based on findings that suggested Tesla’s board was overly influenced by Musk during the creation of the compensation plan. However, the Delaware Supreme Court found errors in McCormick’s ruling, stating in its 49-page decision that the 2018 pay package should be reinstated. The court also awarded Tesla $1 in nominal damages.
For further details, the full court ruling can be accessed here.
