What's happened
On December 19, 2025, the Delaware Supreme Court reinstated Elon Musk's 2018 Tesla stock options pay package, valued at about $140 billion today, overturning a 2024 ruling that had rescinded it. This decision follows Tesla shareholders' recent approval of an even larger $1 trillion pay plan for Musk, contingent on ambitious company milestones over the next decade.
What's behind the headline?
Legal and Corporate Governance Implications
The Delaware Supreme Court's reversal highlights tensions between corporate boards, shareholders, and executive compensation oversight. While the court acknowledged fiduciary breaches in the original approval process, it deemed rescinding Musk's pay "inequitable," emphasizing compensation for his six years of leadership.
Musk's Strategic Moves
Musk's relocation of Tesla's incorporation to Texas and the introduction of a new pay package with stringent milestones reflect a strategic effort to shield compensation plans from shareholder litigation and court challenges. Texas's higher ownership threshold for lawsuits reduces legal risks for Musk and Tesla.
Market and Shareholder Impact
The reinstatement increases Musk's potential Tesla stake from 12.4% to 18.1%, consolidating his control. The ambitious targets tied to the new $1 trillion pay package—such as delivering millions of vehicles and achieving an $8.5 trillion market valuation—set a high bar that will drive Tesla's strategic direction.
Broader Corporate Precedent
This case may influence how courts balance executive pay fairness against governance concerns, especially for high-profile tech leaders. Musk's public criticism of Delaware's judiciary and the subsequent corporate moves could inspire other companies to reconsider their legal domiciles.
Outlook
Musk will likely continue leveraging his influence to shape Tesla's future, with shareholder support for his compensation signaling confidence in his leadership despite governance controversies. The legal landscape for executive pay disputes may become more complex as companies adopt similar protective measures.
What the papers say
The Guardian detailed the court's reasoning, noting the justices found rescinding Musk's pay "inequitable" despite acknowledging fiduciary breaches, and highlighted Musk's public criticism of Delaware's judiciary and Tesla's move to Texas. Sky News emphasized the financial scale, reporting the reinstated package's value at $139 billion and the new $1 trillion pay plan approved by shareholders, outlining the ambitious milestones Musk must meet. The Independent provided context on the legal battle, describing the initial 2024 ruling by Chancellor McCormick and Musk's reaction, including Tesla's reincorporation in Texas and the board's efforts to secure shareholder reaffirmation. AP News succinctly reported the Delaware Supreme Court's reversal of the 2024 decision nullifying Musk's pay. Al Jazeera and the NY Post both underscored the impact on Delaware's business reputation and detailed the legal and corporate governance dynamics, including the shareholder lawsuit by Richard Tornetta and Tesla's strategic legal protections in Texas. Together, these sources offer a comprehensive view of the legal, financial, and strategic dimensions of Musk's compensation saga.
How we got here
Elon Musk's 2018 Tesla compensation plan, initially valued at $56 billion, was rescinded in 2024 by Delaware Chancellor Kathaleen McCormick due to conflicts of interest and insufficient shareholder disclosure. The plan was challenged by a small shareholder lawsuit. Tesla later reincorporated in Texas and approved a new, larger pay package for Musk in 2025, amid ongoing legal and corporate governance disputes.
Go deeper
- What were the legal reasons for rescinding Musk's 2018 pay package?
- How does Tesla's new $1 trillion pay plan work?
- Why did Tesla move its incorporation from Delaware to Texas?
More on these topics
-
Elon Reeve Musk FRS is an engineer, industrial designer, technology entrepreneur and philanthropist. He is the founder, CEO, CTO and chief designer of SpaceX; early investor, CEO and product architect of Tesla, Inc.; founder of The Boring Company; co-foun
-
The Delaware Supreme Court is the sole appellate court in the United States state of Delaware. Because Delaware is a popular haven for corporations, the Court has developed a worldwide reputation as a respected source of corporate law decisions, particula
-
Tesla, Inc. is an American electric vehicle and clean energy company based in Palo Alto, California. The company specializes in electric vehicle manufacturing, battery energy storage from home to grid scale and, through its acquisition of SolarCity, solar