The Delaware Supreme Court has reinstated the groundbreaking compensation package Tesla provided to Elon Musk, finding that Musk met all required milestones over the six years since Tesla stockholders approved it in 2018. The package, valued at more than $56 billion, more than doubles the value of the equity now under Musk’s control.
The case is In re Tesla Inc. Derivative Litigation, Case Numbers 534, 2024; 10, 2025; 11, 2025; and 12, 2025, Delaware Supreme Court. The lower court case is Tornetta et al. v. Musk et al., Case Number 2018-0408, in the Delaware Court of Chancery.
The unsigned ruling grants Musk millions of fully vested stock options now worth more than $140 billion. The state high court decision reverses most of the lower Court of Chancery’s decision but preserves a multimillion-dollar fee for stockholder class attorneys. However, the court reduced the previously calculated $345 million in fees and expenses to $68 million, which is still quadruple the attorneys’ actual costs.
The lower court rejected the argument that rescinding the pay package would be harsh, finding that Tesla and its board failed to offer any alternative relief beyond leaving it intact. After the lower court issued its decision, Tesla stockholders voted to remove Tesla’s corporate charter from Delaware and move it to Texas. Tesla’s move also triggered a widespread movement encouraging other corporations to follow its lead and leave Delaware’s corporate jurisdiction, commonly known as a “DExit” campaign.
During the state Supreme Court arguments in the case, which occurred in October 2025, one justice inquired how it was fair to relegate Musk to the status quo ante after achieving his contract goals over six years. However, despite the court reinstating the pay package, it also pointed out various serious procedural breaches committed by Tesla’s board, thereby validating some of the lower court’s observations. For instance, Tesla’s board approved terms under which Musk decided the timing of the compensation approval process. The board also reportedly approved Musk’s changes to the substantive terms of the package just before six out of ten board or committee meetings that included discussion of the package.
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