A Delaware appeals court on Friday restored Elon Musk’s contested 56 billion dollar Tesla pay package, overturning earlier rulings that had invalidated the award and ending a yearslong legal battle over the record setting compensation.
The Delaware Supreme Court rejected decisions by Chancellor Kathaleen McCormick of the Delaware Court of Chancery who had struck down the 2018 pay package, describing the approval process as deeply flawed. The five judge appeals panel ruled that McCormick erred in ordering the package to be voided in its entirety.
According to the court, “We reverse the Court of Chancery’s rescission remedy and award $1 in nominal damages.” The judges stated that it is undisputed that Musk fully performed under the 2018 grant and Tesla and its stockholders were rewarded for his work.
The case originated from a lawsuit filed by Tesla shareholder Richard Tornetta, who challenged the compensation as excessive even though it had received shareholder approval. In January 2024, following a five day trial, McCormick struck down the award, writing that Tesla’s board was vulnerable to manipulation by Musk.
The Delaware Supreme Court judges said the lower court’s decision to cancel Musk’s 2018 pay plan was too extreme a remedy and that McCormick did not give Tesla a chance to say what fair compensation ought to be. The decision likely ends the yearslong fight over Musk’s record setting compensation.
Tesla’s board has consistently backed Musk throughout the legal battle. The company granted Musk an interim stock award valued at roughly 29 billion dollars earlier this year to ensure continued alignment while the legal fight played out. With the Supreme Court decision now final, that interim compensation will be forfeited as the board made clear it would prevent any double payment.
In November 2025, Tesla shareholders approved a new compensation package for Musk valued at up to one trillion dollars if the company hits certain milestones over the next decade. The new plan consists of 12 tranches of shares and could increase Musk’s voting power over the company from around 13 percent to around 25 percent.
The package awarded Musk the option to purchase 303 million split adjusted shares, worth approximately 139 billion dollars at Friday’s closing share price based on Tesla’s current valuation. Musk’s net worth is currently estimated at around 679 billion dollars according to Forbes, making him the world’s richest person.
The 2018 award set out a number of milestones that Musk had to hit in order to unlock the full value. Musk and Tesla achieved all of those goals, transforming the electric vehicle maker from a struggling startup to one of the world’s most valuable companies with a market capitalization of roughly 1.63 trillion dollars.
The ruling so incensed some Delaware observers that Musk urged businesses to follow Tesla and reincorporate elsewhere. The company has since reincorporated in Texas. Dropbox, Roblox, The Trade Desk and Coinbase were among the handful of large companies that moved their legal homes to Nevada or Texas following the controversy.
However, Delaware remains by far the most popular legal home for United States public companies. The state’s business friendly reputation and well developed corporate law framework continue to attract corporations despite the Musk pay package controversy.
Dorothy Lund, a professor at Columbia Law School, noted that while the Friday opinion restores the 2018 pay plan for Musk, it leaves the rest of the lower court’s decision unaddressed and intact. The court also ruled that the plaintiff’s attorneys are entitled to fees and expenses with a four times multiplier plus post judgment interest.
