Elon Musk is about to get a whole lot richer thanks to a Delaware Supreme Court decision that has reinstated his long-disputed $56 billion Tesla pay package, which was once described as “unfathomable.”
The Friday judgment brings to an end a seven-year legal battle that stymied the largest paycheck in corporate history, prompting the Tesla CEO to lash out at the state and spark a flurry of business departures.
“I try not to start fights, but I do finish them,” Musk wrote on X in response to the news.
The ruling greenlights a financial arrangement through which Tesla shareholders incentivise Musk to raise Tesla share prices and remain with the electric vehicle company. The CEO is not paid a salary, but instead receives company stock.
In 2018, shareholders approved an equity compensation plan that included access to Tesla shares at well below market value. At the time, the shares would have been worth $56 billion, but they are now worth closer to $139 billion. This scheme is separate from the $1 trillion compensation deal shareholders approved for Musk in November.
In a 2018 lawsuit, shareholder Richard Tornetta challenged the compensation plan, arguing that Musk had too much sway over the decision. Delaware judge Kathaleen McCormick agreed.
“The incredible size of the biggest compensation plan ever—an unfathomable sum—seems to have been calibrated to help Musk achieve what he believed would make ‘a good future for humanity,’” McCormick wrote in her 201-page 2024 opinion.
That decision has now been overturned, with the Delaware Supreme Court ruling that the plan be reinstated. Not doing so would have left “Musk uncompensated for his time and efforts over a period of six years,” the court found.
The court also awarded Musk $1 in nominal damages.
The 54-year-old billionaire head of Tesla, X, and SpaceX relocated his businesses from Delaware to Nevada and Texas following the legal spat and encouraged others to do the same.
“Shareholders should control company votes, not judges,” Musk wrote in response to the 2024 ruling.
“Never incorporate your company in the state of Delaware,” he wrote in a separate post, elsewhere branding the judges “activists” and the state as hostile to tech companies.
In response, Dropbox, Roblox, Trade Desk, and Coinbase all moved their headquarters from Delaware, although the Mid-Atlantic state remains a significant legal home for U.S. companies.
The 2018 package has since been dwarfed by the similarly structured compensation deal approved by Tesla shareholders in November, which will award Musk $1 trillion if performance metrics are met.
“Thanks, guys,” Musk said in response to that decision, which was announced at a shareholder event in Austin, Texas, where Musk awkwardly danced beside the company’s Optimus robots.
The package gives Musk more control over Tesla, which he plans to use to direct investment into artificial intelligence and robotics in an effort to build a “robot army.”
The 54-year-old is currently estimated by Forbes to be worth around $684 billion, making him the richest person in the world.
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