WILMINGTON, Del. — The Delaware Supreme Court reinstated the Elon Musk Tesla pay package Friday, restoring Tesla’s 2018 stock-option award for its CEO. The justices reversed the lower court’s rescission remedy and said wiping out the deal would be inequitable because it “leaves Musk uncompensated for his time and efforts over a period of six years,” Dec. 19, 2025.
In its 49-page opinion, the court reinstated the 2018 plan, awarded $1 in nominal damages and said the shareholder’s lawyers should be paid a cash fee tied to the value of their work, multiplied four times, with any disputes to be handled back in the trial court.
The decision restores an incentive plan that was once valued at about $56 billion and is now worth roughly $139 billion, based on Tesla’s closing stock price Friday, according to Reuters. Tesla did not immediately respond to a request for comment, and Musk wrote “vindicated” on X, the news service reported.
Elon Musk Tesla pay package: what the court restored
The Elon Musk Tesla pay package is a 10-year performance award approved in 2018, made up of 12 tranches of stock options tied to market capitalization and operational targets. Reuters said the plan grants Musk options for about 304 million shares at a discounted strike price—about 9% of Tesla’s outstanding stock—if the targets are met.
Those targets were met, and the options are now deeply in the money. If Musk exercises the full award, his ownership stake would rise to about 18.1% from about 12.4% on an expanded share base, Reuters reported.
Supporters say the structure keeps Musk focused on execution rather than a salary. Critics argue the board’s close ties to Musk weakened negotiations and disclosure. The Associated Press noted the pay fight also helped push Tesla to reincorporate in Texas after the 2024 ruling.
How the Elon Musk Tesla pay package dispute escalated
The case became a corporate governance flashpoint in early 2024 when a Delaware judge voided the compensation plan, calling the award an “unfathomable sum” and faulting the board’s process and disclosures.
Tesla then asked investors to reapprove the same plan. Shareholders backed the measure by wide margins in June 2024, Reuters reported at the time, but the legal battle continued.
By December 2024, the same judge again rejected Tesla’s bid to restore the package, setting up the appeal that ended Friday at the Supreme Court.
What happens next
Friday’s decision removes a major legal overhang for Tesla, but it does not end the debate over how boards should set pay for superstar founders. The Supreme Court reinstated the plan while awarding only nominal damages, rejecting the trial court’s remedy of total rescission.
Tesla shareholders also have a newer performance plan for Musk, and the company has already moved its incorporation to Texas, which Reuters said can make it harder for small shareholders to bring certain suits. For investors, the immediate question is whether restoring the Elon Musk Tesla pay package settles Musk’s push for more control—or simply resets the bar for the company’s next compensation debate.
