In a decisive victory for Elon Musk, Tesla, and shareholders, the Delaware Supreme Court has officially reinstated his 2018 compensation package. This overturns a lower court ruling that had voided the record-breaking package.
The ruling puts an end to the years-long legal saga over the pay plan, which was valued at roughly $56 billion at the time of its vesting, and is estimated to be worth approximately $139 billion today due to the appreciation of Tesla’s stock.
“Improper and Inequitable”
The state’s highest court issued a 49-page opinion reversing the January 2024 decision by Chancery Court Judge Kathaleen McCormick, who had rescinded the entire package on the grounds that Tesla’s board lacked independence and the approval process was flawed.
The Supreme Court justices, however, found that completely voiding the contract was a step too far. They argued that rescinding the pay package was “improper and inequitable” because it effectively left Elon uncompensated for his time and efforts over a period of six years - a period during which he met every single one of the aggressive milestones set by the board and transformed Tesla into a trillion-dollar company.
"It is undisputed that Musk fully performed under the 2018 grant, and Tesla and its stockholders were rewarded for his work," the ruling stated.
The $1 Penalty
While the court reinstated the billions in stock options, it did not let Tesla off the hook entirely regarding the procedural flaws found by the lower court.
In a nod to the plaintiff’s concerns about board governance, the Supreme Court awarded Tesla $1 in nominal damages. This acknowledges that while the board’s process may have been imperfect (given close ties with Elon), the remedy of deleting the CEO’s entire paycheque was vastly disproportionate to the harm done.
Legal Fees Reduced
The ruling also dealt a massive financial blow to the plaintiff’s legal team, who had originally requested a record-shattering $5.6 billion in Tesla stock as their fee - a figure that Judge McCormick had already slashed to $345 million. With the pay package reinstated, the “benefit” to Tesla (upon which those massive fees were calculated) has effectively vanished.
Consequently, the Supreme Court has also rejected the percentage-based fee entirely, ruling instead that the lawyers should be paid on quantum meruit - essentially their hourly rate - plus a multiplier for the case. This shift is expected to drop their payout from hundreds of millions to roughly $55 million (based on a 4x multiplier of their $13.6 million in billable hours), turning what was originally a king’s ransom into a relative fraction of the original award.
Vindication for Elon
Elon Musk, who previously spoke out against the Delaware legal system and spearheaded Tesla’s reincorporation in Texas as a result of the lower court ruling, celebrated the decision immediately.
Vindicated
— Elon Musk (@elonmusk) December 19, 2025
This ruling secures Elon’s ownership stake in Tesla - roughly 20.5% with the options - which he has argued is necessary to protect Tesla from outside interference and to develop advanced AI and robotics technologies without harm being done to humans. Tesla shareholders recently approved Elon Musk’s newest pay package, which could be valued at up to one trillion dollars.
