- The Delaware Supreme Court reinstated Elon Musk’s 2018 Tesla pay package, overturning a decision that had frozen the deal.
- This pay package, now valued at about $140 billion, depends on Tesla achieving significant performance goals.
- Tesla shareholders have repeatedly supported Musk’s compensation and leadership through several high-profile votes.
- Tesla stock rose in after-hours trading following the decision, and retail investor sentiment remains strong.
Elon Musk’s 2018 pay package at Tesla is back in effect after the Delaware Supreme Court overturned a lower court’s ruling on Friday. The court found that voiding the stock-based compensation plan was not appropriate. The package, originally locked due to a shareholder lawsuit, was approved by shareholders in 2018 and grants Musk the option to acquire roughly 304 million shares if certain market and operational benchmarks are met.
The pay package was initially valued near $56 billion but is now estimated at about $140 billion after strong appreciation in Tesla’s stock price. The plan had been on hold after a shareholder sued, alleging Musk exercised undue influence during the plan’s creation. This led the Chancery Court to rule that Tesla’s board had conflicts and that shareholders were not fully informed before their approval. As a result of the legal dispute, Tesla relocated its legal incorporation to Texas, matching a shift seen in Musk’s other companies.
In response to the Supreme Court’s reversal, Musk described himself as “vindicated” in a post on X. The court highlighted that invalidating the entire package would have left Musk uncompensated for six years of work—an outcome it deemed unfair.
Support among Tesla shareholders for Musk’s role and compensation remains high. In November, investors passed another performance-linked pay plan with around 75% approval, signaling continued confidence as the company advances in areas like AI, robotics, and self-driving vehicles. That plan could reach up to $1 trillion in value if major long-term milestones, such as robotaxi expansion and robot development, are met.
Following news of the court’s decision, Tesla’s shares gained 0.2% in after-hours activity, maintaining levels near $481.20. Retail investor sentiment, tracked on Stocktwits, has been described as bullish with high message volume. Since the beginning of 2025, Tesla stock is up 19%. According to Dan Ives, managing director at Wedbush Securities, this legal development positions Tesla for a strong future as it pivots to autonomous technologies.
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