Key Points
- The Delaware Supreme Court restored Elon Musk’s 2018 Tesla pay package. The compensation deal is now worth approximately $139 billion.
- Judges ruled that canceling the entire deal was unfair to Musk’s years of work.
- Winning the appeal saved Tesla from a potential $26 billion loss in profits.
- Tesla moved to Texas to make it harder for small investors to sue.
Elon Musk finally won his long battle to keep his massive Tesla pay deal. On Friday, the Delaware Supreme Court reversed a previous ruling that had canceled his 2018 compensation package. This deal was originally valued at about $56 billion, but Tesla’s stock price has risen over the years, and it is now worth $139 billion.
A lower court judge had previously struck down the deal, calling the amount of money “unfathomable.” That judge believed Tesla’s board of directors wasn’t honest with shareholders and acted too closely with Musk. However, the state’s highest court disagreed this week.
The justices stated that completely throwing out the deal was unfair. They argued that it left Musk with no compensation for six years of work, a period during which he transformed Tesla from a struggling startup into one of the most valuable companies on Earth.
Musk reacted to the news on his social media platform, X, simply saying he felt “vindicated.” The ruling also provides significant financial relief to Tesla. If they had lost the appeal, the company might have had to take a $26 billion hit to its profits to cover a replacement stock plan for Musk at today’s higher prices.
The legal fight had a huge impact on where Tesla does business. Musk was so angry with the original Delaware ruling that he moved Tesla’s legal home to Texas. He accused Delaware judges of being activists hostile to tech founders. Since then, several other major companies have followed his lead and relocated to states such as Nevada or Texas.
Looking ahead, Tesla shareholders have already approved a new, even larger pay plan for Musk. This new deal could be worth nearly $878 billion if the company meets ambitious goals for autonomous vehicles and humanoid robots.
To prevent additional small investors from blocking these deals, Tesla’s new rules in Texas require anyone suing the company under corporate law to own at least 3% of its stock. At current prices, that would require an investor to hold $30 billion in shares to file a similar lawsuit.
