Musk wins US appeal to restore 2018 Tesla pay package

Two years after a lower court rejected the compensation agreement, the Delaware Supreme Court in the United States reinstated Elon Musk’s 2018 pay package from Tesla, which was previously valued at $56 billion.

The decision on Friday overturns a ruling that caused the company’s reputation to suffer and Musk had sparked a furious backlash.

Up until Tesla shareholders approved a new, nearly $1 trillion pay plan in November, the pay package was by far the largest ever.

Since Musk transformed Tesla from a struggling startup to one of the most valuable companies in the world, with the ruling, he can now be paid for his efforts.

If Tesla reached a number of milestones as per the 2018 pay agreement, Musk had options to purchase about 304 million shares for a significantly reduced price.

Tesla predicted that the plan could have been worth $56 billion in 2018, but given the increase in stock prices, the value had increased to about $ 120 billion by early November. About 9% of Tesla’s outstanding stock is made up of the options.

Because Richard Tornetta, a shareholder in Tesla’s stock, sued the board shortly after shareholders approved the 2018 compensation, Musk never reclaimed his stock options.

After a five-day trial, Delaware Judge Kathaleen McCormick determined that Tesla’s directors were in conflict and that important details were kept secret from the plan’s supporters until 2024. She mandated that the 2018 strategy be canceled.

Musk alleged that Delaware judges were activists and hostile to tech founders, and urged businesses to re-incorporate after Tesla and do so in other states.

One of the few notable large companies that relocated to Nevada or Texas was Dropbox, Roblox, The Trade Desk, and Coinbase. Delaware is still largely used by US public companies as their legal home.

Tesla’s board has warned that Musk, the richest person in the world and the founder of xAI, could leave the electric car company if his pay is not received in addition to his increased voting power. He also holds the top positions in the space shuttle industry.

If Tesla achieves goals for self-driving cars, a robotaxi network, and sales of humanoid robots, shareholders approved a new pay package in November that could be worth $878 billion.

Tesla has taken steps to lessen the chance that a shareholder might dispute the 2025 package in court.