The years-long legal battle over Elon Musk’s 2018 Tesla compensation package has finally come to an end. On Friday, the Delaware Supreme Court ruled that Musk is entitled to the massive, milestone-based pay deal, overturning a lower court decision that had previously voided the agreement.
At the center of the dispute was Musk’s 2018 CEO compensation plan, which tied his pay entirely to Tesla achieving a series of aggressive operational and market-capitalization targets. At the time it was approved, the package was widely viewed as unprecedented, offering Musk no salary, bonuses, or guaranteed equity—only stock options that would vest if Tesla dramatically increased its size and performance.
That plan was struck down in early 2024 by Delaware’s Court of Chancery after a shareholder lawsuit claimed Tesla’s board breached its fiduciary duties when approving the award. Chancellor Kathaleen McCormick ruled that the approval process was flawed and ordered the entire compensation package rescinded.
Tesla appealed, and the state’s highest court has now reversed that outcome.
“We reverse the Court of Chancery’s rescission remedy and award $1 in nominal damages,” the Delaware Supreme Court wrote in its opinion. The justices concluded that fully canceling the pay package was an excessively harsh remedy, particularly given that Musk had already delivered on Tesla’s ambitious growth goals.
The case, formally known as Tornetta v. Musk, was brought by shareholder Richard J. Tornetta, who alleged Musk effectively controlled Tesla and influenced the board’s decision-making process. While the Supreme Court did not fully endorse the lower court’s findings, it ruled that rescinding the pay package outright went too far and failed to account for Musk’s performance under the agreement.
The 2018 compensation plan was structured around 12 tranches of stock options, each tied to both financial and operational milestones. Since then, Tesla’s valuation has surged well beyond the highest targets outlined in the plan, making the award one of the most valuable executive compensation packages in corporate history.
The ruling also likely closes the door on further appeals, effectively ending the legal uncertainty that has surrounded Musk’s Tesla pay for years.
The decision comes after Tesla shareholders approved a new, even more aggressive compensation framework that could ultimately be worth up to $1 trillion if Tesla achieves extraordinary future growth targets—highlighting continued investor confidence in Musk’s leadership.
You can read the full ruling below.
