Elon Musk Wins Appeal Over 2018 Compensation Package — Now Estimated at $139 Billion
The Delaware Supreme Court has reinstated Elon Musk’s 2018 compensation package, overturning a lower court decision that had voided it. The ruling is a decisive victory for Musk, Tesla, and the company’s shareholders.
The Delaware Supreme Court has reinstated Elon Musk’s 2018 compensation package, overturning a lower-court ruling that had voided the award. The decision ends a years-long legal dispute over a plan valued at roughly $56 billion at vesting and now estimated at about $139 billion after Tesla’s stock appreciation.
In a 49-page opinion, the state’s highest court reversed Chancery Court Judge Kathaleen McCormick’s January 2024 ruling, which had rescinded the package on the grounds that Tesla’s board lacked independence and that the approval process was flawed. The Supreme Court concluded that completely voiding the contract was “improper and inequitable,” noting that such a remedy left Musk uncompensated for six years during which he met the board’s aggressive milestones and helped transform 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 opinion said.
While reinstating the stock award, the court acknowledged governance deficiencies and awarded Tesla nominal damages of $1—signaling recognition of procedural problems while deeming rescission disproportionate to the harm.
The ruling also dramatically reduced the potential payout to the plaintiff’s legal team. Attorneys had sought $5.6 billion in Tesla stock as fees—a figure Judge McCormick had already cut to $345 million—but the Supreme Court rejected a percentage-based fee tied to the reinstated benefit. Instead, it ordered payment on a quantum meruit basis (hourly rates plus a multiplier), a shift expected to lower fees to roughly $55 million based on a 4× multiplier applied to $13.6 million in billable hours.
Musk praised the decision. He had previously criticized the Delaware courts and initiated steps to reincorporate Tesla in Texas after the lower court ruling.
The reinstatement preserves Musk’s roughly 20.5% ownership stake when the options are included—an ownership level he has argued is necessary to protect Tesla from outside interference and to pursue advanced AI and robotics development. Tesla shareholders also recently approved a new pay package for Musk that could be valued at up to $1 trillion.
In a 49-page opinion, the state’s highest court reversed Chancery Court Judge Kathaleen McCormick’s January 2024 ruling, which had rescinded the package on the grounds that Tesla’s board lacked independence and that the approval process was flawed. The Supreme Court concluded that completely voiding the contract was “improper and inequitable,” noting that such a remedy left Musk uncompensated for six years during which he met the board’s aggressive milestones and helped transform 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 opinion said.
While reinstating the stock award, the court acknowledged governance deficiencies and awarded Tesla nominal damages of $1—signaling recognition of procedural problems while deeming rescission disproportionate to the harm.
The ruling also dramatically reduced the potential payout to the plaintiff’s legal team. Attorneys had sought $5.6 billion in Tesla stock as fees—a figure Judge McCormick had already cut to $345 million—but the Supreme Court rejected a percentage-based fee tied to the reinstated benefit. Instead, it ordered payment on a quantum meruit basis (hourly rates plus a multiplier), a shift expected to lower fees to roughly $55 million based on a 4× multiplier applied to $13.6 million in billable hours.
Musk praised the decision. He had previously criticized the Delaware courts and initiated steps to reincorporate Tesla in Texas after the lower court ruling.
The reinstatement preserves Musk’s roughly 20.5% ownership stake when the options are included—an ownership level he has argued is necessary to protect Tesla from outside interference and to pursue advanced AI and robotics development. Tesla shareholders also recently approved a new pay package for Musk that could be valued at up to $1 trillion.
