Elon Musk has won a major legal victory after the Delaware Supreme Court reinstated his massive Tesla compensation package, valued at about $55 billion.
The ruling, released Friday, overturned a lower court decision that had canceled the pay deal earlier this year.
The decision restores a landmark 2018 agreement that rewarded Musk for leading Tesla through years of rapid growth and major business milestones.
The court ruled that canceling the pay package was unfair and went too far. In its opinion, the justices said undoing the deal left Musk unpaid for years of work and success at the electric car company.
The court called the earlier ruling "inequitable" and said reversing a contract should only happen in rare cases. As part of the decision, the court awarded Tesla $1 in nominal damages, BusinessInsider reported.
The original pay package was approved by Tesla shareholders in 2018. At the time, Tesla was struggling to boost production and was still losing money.
The plan tied Musk's pay to strict goals, including higher vehicle sales and a big jump in the company's market value. If those goals were met, Musk would earn stock options instead of a salary or cash bonus.
Another purchase of Tesla shares by Elon is likely☝️☝️☝️
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The Supreme Court of Delaware has ruled that Elon Musk's $56 billion 2018 pay package must be reinstated. Elon is winning💪💪💪 pic.twitter.com/2ZZO7y3lYM
Supreme Court Restores Elon Musk's Massive Tesla Pay
Over the next few years, Tesla's business improved. Manufacturing problems eased, sales climbed, and the company's value soared from roughly $50 billion to well over $1 trillion at its peak. Those gains allowed Musk to qualify for the full payout promised in the 2018 deal.
However, in January 2024, Delaware Chancery Court Judge Kathaleen St. Jude McCormick struck down the pay package after a shareholder lawsuit.
She ruled that Tesla's board was too close to Musk and did not properly protect investors when approving the deal. That decision angered Musk, who publicly criticized Delaware's legal system.
Soon after, Tesla moved its corporate home from Delaware to Texas. Tesla's board also asked shareholders to vote again on the 2018 pay package, AP News reported.
Investors approved it a second time, showing strong support for Musk's leadership.
The Supreme Court's ruling now settles that dispute and restores the original compensation.
It also comes as Tesla shareholders recently approved an even larger future pay plan that could be worth up to $1 trillion if Musk leads the company to reach ambitious growth goals over the next decade.
Originally published on vcpost.com
