State Supreme Court reverses lower rulings, reinstating Elon Musk’s 2018 compensation plan after years of legal challenges and shareholder disputes.
The Delaware Supreme Court has reinstated a massive compensation package awarded to Tesla Chief Executive Officer Elon Musk in 2018, ending a prolonged legal battle that had twice stripped the pay deal despite shareholder approval.
In a ruling issued late Friday December 19, 2025, the state’s highest court overturned decisions by the Delaware Court of Chancery that had voided the package, which grants Musk options to buy 303 million split-adjusted Tesla shares. At Friday’s closing price, the award is valued at about $139 billion, making it the largest executive compensation package ever restored by a U.S. court.
The Supreme Court said the lower court erred by canceling the plan, calling the outcome “inequitable” and concluding that its rejection left Musk “uncompensated for his time and efforts over a period of six years.”
The decision reverses rulings by Chancellor Kathaleen McCormick, who had found the package unfair to shareholders, even after Tesla investors voted twice to approve it. McCormick had ruled that Tesla’s board failed to prove the pay deal was fair, citing Musk’s influence over the company and its directors.
Tesla originally approved the performance-based package in 2018, tying Musk’s compensation to aggressive targets related to market value, revenue, and profitability. Tesla’s rapid growth since then pushed the award’s value far beyond initial projections, fueling criticism from some investors and governance advocates.
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Musk, already the world’s richest person, has an estimated net worth of about $644 billion, according to Bloomberg’s Billionaires Index. Much of that wealth stems from his existing Tesla holdings, which total roughly 413 million shares valued at about $199 billion. Tesla’s stock is trading near record highs reached earlier this week.
The restored package comes alongside another newly approved compensation plan that could be worth as much as $1 trillion if Tesla’s stock rises to levels projected by Musk and the company. Tesla has argued that such incentives are necessary to retain Musk and align his interests with long-term shareholder value.
Beyond Tesla, Musk’s fortune is bolstered by his stake in SpaceX, the private rocket and satellite company. Musk has said he plans to take SpaceX public as early as next year, a move that could further expand his wealth.
Reacting to the court’s decision, Musk thanked supporters in a brief post on X, calling the ruling a validation after years of legal uncertainty.
The decision is expected to reignite debate over executive pay, shareholder rights, and corporate governance, particularly as companies increasingly rely on outsized incentive packages to retain high-profile founders and executives.