Tesla’s years-long legal battle over Elon Musk’s $56 billion pay package is nearing its conclusion, with the Delaware Supreme Court now deliberating whether to reinstate the compensation plan that was struck down last year.
On Wednesday, attorneys for Tesla urged the state’s highest court to overturn a lower court ruling that invalidated Musk’s 2018 compensation package, arguing that shareholders twice voted in favor of it and were fully informed each time.
“This was the most informed stockholder vote in Delaware history,” Tesla attorney Jeffrey Wall told the justices. “Reaffirming that would resolve this case.” (via Reuters)
The original plan, approved by Tesla’s board seven years ago, granted Musk stock options tied to aggressive performance targets — all of which he has since met. The Delaware Chancery Court, however, voided the deal in January 2024 after concluding that Tesla’s board lacked independence from Musk and failed to provide investors with sufficient information before approving the payout.
Representing shareholder Richard Tornetta, attorney Greg Varallo argued that the company’s 2024 shareholder revote was an improper attempt to “revise a judicial finding,” warning that allowing it would make corporate lawsuits “interminable.”
While Musk did not attend the hearing, Tesla’s board has already prepared contingency plans. In August, directors approved a replacement stock award valued at roughly $25 billion if the 2018 plan remains voided. A month later, the board proposed a new compensation package for Musk that could be worth up to $1 trillion, reflecting confidence in his leadership as Tesla pivots from electric vehicles (EVs) toward robotics and autonomous driving.
