Elon Musk further secured his position as the world's richest man after a court decision reversed an earlier ruling on his massive Tesla pay package.
On December 19, the Delaware Supreme Court reinstated Musk's 2018 compensation deal after a years-long legal challenge. According to the Wall Street Journal, the package has grown in value to $139 billion, making it the largest executive pay package in corporate history.
The Delaware Supreme Court said the lower court's decision would have meant Musk wouldn't have been compensated for several years of work, as it said in the report. The justices wrote that rescinding the agreement was an "extreme remedy" and was not clearly warranted. The ruling reversed a 2024 decision from Delaware's Chancery Court, which had found that Tesla's board was too closely tied to Musk and there was a lack of transparency during the approval process. Per the Supreme Court decision, though, Musk will receive the full 2018 pay package.
The court still affirmed part of the lower court's findings by awarding $1 in nominal damages to the shareholder who brought the lawsuit, Richard Tornetta. The court also ruled that Tornetta's attorneys were entitled to fees, noting that the lower court had previously awarded $345 million, according to the WSJ.
Musk's reinstated stock options now represent roughly 9% of Tesla's market capitalization, as per Equilar data cited in the report. The ruling does not affect a separate pay package that has already been approved by Tesla shareholders in November. For Musk to earn the full value of the 2025 package, he has to gain more voting control to remain focused on Tesla as it pivots toward AI and robotics, according to the WSJ.
Investors like Jeremy Grantham have said that Musk's compensation shows that his value creation is driven by stock performance rather than traditional pay structures, and Musk's wealth is closely tied to Tesla's market capitalization rather than salary or bonuses. Despite Musk's financial stature, the tech giant's business ventures have faced regular scrutiny, including environmental violations.
On the other hand, Musk's focus on electric vehicles and can reduce warming temperatures compared to gas-powered cars. Tesla remains one of the largest EV manufacturers globally. The court decision, however, demonstrates how leadership and governance can shape public perception around Musk and his companies.
"I'm not sure overturning the remedy and reinstating Musk's pay package will undo the damage done by the Chancellor's decision. Failing to overturn the underlying (wrong) liability analysis still leaves founder-controlled Delaware corporations exposed to the threat of catastrophic litigation," one reader wrote in the comments section under the report.
"The damage is done," another commented.
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