Tesla is making one last push to restore Elon Musk's $56 billion pay package, asking the Delaware Supreme Court to overturn a lower court's ruling that canceled the record-breaking deal earlier this year.
The company's lawyers argued Wednesday that shareholders fully understood what they were approving when they voted for the compensation plan.
"This was the most informed stockholder vote in Delaware history," said Tesla attorney Jeffrey Wall, urging the justices to recognize last year's shareholder vote as valid. "Reaffirming that would resolve this case."
The appeal marks the final stage of a lengthy legal fight that could reshape how US companies handle executive pay and corporate oversight.
In January 2024, Delaware Chancellor Kathaleen McCormick struck down Musk's pay plan, ruling that Tesla's board lacked independence and that investors didn't have full details when they first approved the deal in 2018, Reuters said.
McCormick's decision sparked outrage among Musk supporters and business leaders, who accused Delaware's courts of being too harsh on entrepreneurs.
Since then, several major firms — including Dropbox, Andreessen Horowitz, and Tesla itself — have shifted their legal base from Delaware to Texas or Nevada, where corporate laws are seen as more management-friendly. The trend has been dubbed "Dexit."
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Elon Musk's Record Pay Deal Faces Delaware Review
Tesla's lawyers told the court that the earlier ruling was flawed, claiming Musk did not control the board's decision-making and that shareholders were fully informed.
They also argued that undoing the deal unfairly ignores Musk's contributions to the company's massive growth.
"Shareholders in 2024 knew exactly what they were voting for," Wall said, emphasizing that the second vote to reapprove the deal should be binding.
If the appeal fails, Musk will still receive billions under a replacement compensation plan Tesla approved in August, which the company says is meant to keep him focused on new projects, including robotics and self-driving technology.
That plan could cost Tesla more than $25 billion in accounting charges.
According to CNBC, the Delaware Supreme Court is also reviewing a separate order requiring Tesla to pay $345 million in legal fees to attorneys for Richard Tornetta, the small investor who originally sued to block Musk's payout.
Tesla's 2018 compensation plan was worth $56 billion when approved but has since grown to nearly $120 billion, making it the largest executive pay package in history.
Musk, now worth roughly $480 billion, has said the package motivated him to turn Tesla into one of the world's most valuable companies.
Originally published on vcpost.com
