A Delaware appeals court on Friday cleared the way for Elon Musk to receive his long-disputed $56 billion Tesla compensation package, reversing earlier rulings that had blocked what was once the largest executive pay award in corporate history.
In a landmark decision, the Delaware Supreme Court overturned two judgments issued by Chancellor Kathaleen McCormick of the state’s Court of Chancery, effectively reopening the path for the world’s richest individual to secure another massive financial windfall.
Chancellor McCormick had ruled in 2024 to invalidate Musk’s 2018 pay package, describing the approval process as “deeply flawed” and concluding that Tesla’s board had been overly influenced by Musk, whom she described as the paradigmatic “Superstar CEO.” Her ruling followed a five-day trial and was reaffirmed in December 2024 after an initial appeal.
However, the five-judge appellate panel disagreed, finding that McCormick erred in ordering a full rescission of the award. In its decision, the court noted that Musk had already fulfilled the performance requirements tied to the compensation plan and that Tesla and its shareholders had benefited substantially.
“It is undisputed that Musk fully performed under the 2018 grant, and Tesla and its stockholders were rewarded for his work,” the court stated as it reversed the rescission.
The 2018 package, which was approved by a majority of Tesla shareholders, became the subject of litigation after shareholder Richard Tornetta challenged it as excessive.
In a statement released Friday, attorneys representing Tesla shareholders said they were reviewing the ruling and considering possible next steps.
Throughout the legal battle, Tesla’s board has consistently stood by Musk. In August, the company approved an interim compensation package valued at approximately $29 billion, followed by the unveiling of a new performance-based pay plan that could be worth up to $1 trillion.
Tesla shareholders overwhelmingly approved the latest package on November 6, tying Musk’s compensation to ambitious valuation and performance milestones, underscoring continued investor confidence in his leadership.
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