⚖️ Delaware Supreme Court restores Musk's $56B Tesla pay

The ruling that voided Elon Musk's 2018 Tesla pay package has itself been voided. On Dec. 19, 2025, the Delaware Supreme Court ruled that the package, worth some $56 billion when it vested, must be restored, CNBC reported. The Court of Chancery, the state's business court, had ordered it cancelled.

"We reverse the Court of Chancery's rescission remedy and award $1 in nominal damages"

Delaware Supreme Court opinion, quoted by CNBC, Dec. 19, 2025

The order was issued per curiam, meaning no single judge signed it, with no dissent noted, per CNBC. The justices said cancelling the plan was too extreme a remedy and that the lower court did not give Tesla a chance to say what fair compensation ought to be.

What the first ruling said

On Jan. 30, 2024, Chancellor Kathaleen McCormick voided the plan, ruling that Tesla's board failed to prove it was fair, CNBC reported. The plan offered Musk 12 tranches of stock options. Each would vest if Tesla's market capitalization rose by $50 billion and it hit a revenue or profit target, according to the opinion as published by the Harvard Law School Forum on Corporate Governance.

"Put simply, neither the Compensation Committee nor the Board acted in the best interests of the Company when negotiating Musk's compensation plan. In fact, there is barely any evidence of negotiations at all"

Chancellor Kathaleen McCormick, Tornetta v. Musk, quoted by CNBC, Jan. 30, 2024

She found that Musk controlled Tesla for this transaction, and that the proxy statement (the document sent to shareholders before the vote) inaccurately described key directors as independent. Less than an hour after the ruling, Musk posted on X: "Never incorporate your company in the state of Delaware," Reuters reported.

What the appeal did not undo

Dorothy Lund, a Columbia Law School professor, told CNBC that the Friday opinion restores the pay plan but leaves the rest of the lower court's decision intact: "None of that was reversed in this decision." Bloomberg Law likewise reported that the ruling left intact McCormick's determination that the board was riven with conflicts of interest.

The money moved too. The Supreme Court cut the fee McCormick awarded the plaintiff's lawyers from $345 million to no more than $54.5 million, Bloomberg Law reported, saying it would not burden the lower court with a reassessment. Lawyers for plaintiff Richard Tornetta said in a statement they were "proud to have participated in the historic verdict below." Tesla did not immediately respond to CNBC's requests for comment.

Forbes had discounted the options by 50% since the January 2024 ruling. After the appeal it removed the discount and valued the options at $139 billion.

The second vote and the move to Texas

Tesla shareholders re-approved the 2018 plan in June 2024, and CNN reported the same meeting approved moving incorporation to Texas, with 63% of shares outstanding voting in favor. In December 2024 McCormick rejected the re-vote as a cure. A stockholder vote standing alone cannot ratify a conflicted-controller transaction, she wrote, per the Associated Press. Musk replied on X: "Shareholders should control company votes, not judges."

The new package

On Nov. 6, 2025, Tesla announced that more than 75% of shares voted in favor of a new package, a vote that excluded the 15% Musk already owns, CNN reported. It would give him as much as 423.7 million additional shares over 10 years, in 12 equal blocks, with the full amount tied to an $8.5 trillion market capitalization. CNN put the potential value at about $1 trillion.

Tesla's board said in a filing that Musk had raised the possibility of leaving the company if he did not get the assurances of control the package could grant, per CNN. Shareholders had also approved a replacement for the 2018 plan in case the Tornetta ruling was upheld on appeal. That plan is now nullified, CNBC reported.

The paper trail continues. Tesla filed an 8-K on Oct. 21, 2026, a 10-Q on Oct. 22, and proxy-material filings (DEFA14A) on Oct. 29 and Nov. 2. The documents read for this piece do not say what those filings contain. MrMoney will not guess.