The Delaware Supreme Court has unanimously ruled to reinstate Elon Musk's 2018 Tesla compensation package, originally valued at $56 billion and now worth around $140 billion. The decision overturns a lower court's 2024 ruling that struck down the deal due to conflicts of interest. Musk, who criticized Delaware's judiciary and relocated Tesla to Texas, hailed the outcome as vindication.
On December 19, 2025, the Delaware Supreme Court issued a unanimous opinion reinstating Elon Musk's 2018 pay package as Tesla's CEO, reversing a Chancery Court decision by Judge Kathaleen McCormick. The package, which granted Musk options for about 304 million Tesla shares upon meeting performance milestones, was approved by shareholders in 2018 but challenged shortly after by plaintiff Richard Tornetta, who owned just nine shares. Tesla achieved all milestones, transforming the company from a struggling startup to one of the world's most valuable, with the package's value ballooning from $56 billion to approximately $140 billion based on current stock prices.
McCormick ruled in January 2024 that the plan resulted from a conflicted process, with board members influenced by Musk and key facts hidden from shareholders, leading to its rescission. Shareholders re-approved the package in 2024, but McCormick rejected this in December, citing undue influence on the "superstar CEO." The Supreme Court acknowledged the fiduciary duty breach but deemed rescission "inequitable," as it would leave Musk uncompensated for six years of efforts. Instead, it awarded $1 in nominal damages to Tornetta and ordered reinstatement.
The ruling follows Musk's public backlash against Delaware, including posts on X calling judges activists and urging reincorporation elsewhere. Tesla moved to Texas in 2024, joined by companies like Dropbox and Coinbase, though Delaware remains the top choice for U.S. public firms. As a hedge, Tesla's board offered Musk a $29 billion package earlier in 2025, now likely to be revoked. Separately, in November 2025, shareholders approved a new plan potentially worth $1 trillion if Tesla hits goals in self-driving tech, robotaxis, and humanoid robots. Musk posted "Vindicated" on X, thanking supporters.
