After months of legal uncertainty and years of shareholder controversy, Delaware’s highest court has ruled in favor of Elon Musk. The Delaware Supreme Court has reinstated Musk’s 2018 Tesla pay package, originally valued at $55 billion and now worth far more, while penalizing him just $1 plus attorney’s fees, as reported by Electrek.
The decision overturns a ruling by the Delaware Court of Chancery, which had previously voided the entire compensation plan after finding that the process used to approve it was unfair. That earlier ruling argued that Tesla’s board was too closely aligned with Elon Musk and that shareholders were misled when voting on the package.
The pay deal, approved by shareholders in 2018, tied Musk’s compensation to a series of aggressive performance milestones. If achieved, the award would dilute existing shareholders by about 8 percent. At the time, the package was framed as highly ambitious. In hindsight, Tesla exceeded every target. With today’s share price, the award is estimated to be worth roughly $139 billion.
Tesla shareholders later sued, claiming the vote was flawed and the board failed to act independently. The Chancery Court agreed and ordered the full rescission of the package. Tesla appealed, pushing the case to the Delaware Supreme Court.
In its ruling, the Supreme Court took a different view. While it acknowledged that the compensation process was unfair and warranted punishment, it concluded that completely canceling the award was too extreme. The court said the plaintiffs only asked for full rescission and did not argue for partial reduction. Because of that, the court said it was forced into an all or nothing choice and ultimately chose to restore the entire package.
The penalty was symbolic. Musk was ordered to pay $1 in nominal damages. However, the plaintiffs’ attorneys will be allowed to recover legal fees, which are expected to total hundreds of millions of dollars. Those costs will be borne by Tesla, not Musk personally.
The ruling also closes the loop on a turbulent period for Tesla’s governance. After the original decision against him, Musk publicly criticized Delaware as a corporate home and moved several of his companies out of the state. Tesla itself later held another shareholder vote on the same pay package, but the court rejected it, citing similar disclosure issues.
In the meantime, Tesla’s board awarded Musk an additional $26 billion in stock without a shareholder vote, a move that would have been reversed if the Supreme Court ruled against him. Shareholders also recently approved an even larger future compensation plan that could eventually be worth up to $1 trillion if extreme growth targets are met.
The outcome has left critics frustrated and supporters vindicated. From a legal standpoint, the ruling underscores how narrow remedies can shape outcomes. From a corporate governance perspective, it reinforces just how extraordinary Musk’s compensation arrangements are. In the end, Musk keeps his billions, pays one dollar, and closes one of the most unusual pay disputes in corporate history.
