On the Dash:
- Tesla CEO Elon Musk and his lawyers will appear before the Delaware Supreme Court to appeal the court’s 2018 decision striking down his $56 billion compensation plan.
- Tesla approved replacement and $1 trillion performance-based stock plans tied to AI, robotaxi, and market goals.
- The Delaware Supreme Court’s decision could influence corporate governance and executive pay standards nationwide.
Tesla CEO Elon Musk’s legal team will appear before the Delaware Supreme Court on Wednesday to appeal a lower court ruling that rescinded his $56 billion compensation package, marking the final stage of a multi-year corporate dispute.
In January 2024, the Delaware Court of Chancery struck down Musk’s 2018 pay plan, citing conflicts of interest and procedural missteps. Chancellor Kathaleen McCormick ruled that the Tesla board lacked independence when approving the package and that shareholders had insufficient information to evaluate it. The court also ordered Tesla to pay  $345 million in legal fees to the plaintiff’s attorneys.
Musk’s lawyers argue that the court misinterpreted the facts and that shareholders were aware of the plan’s terms before approving it. The package was designed to focus Musk on long-term performance milestones, including vehicle production targets and market capitalization goals.
In August, Tesla’s board approved a replacement compensation plan to provide Musk with billions in stock if the original 2018 plan is not reinstated. Last month, the board also proposed a $1 trillion compensation plan that could grant Musk up to 12% of Tesla stock, tying pay entirely to performance milestones such as AI, robotaxi production and market capitalization growth.
Musk’s original 2018 compensation package was valued at $56 billion when approved, but stock appreciation has pushed its value closer to $120 billion, making it one of the most significant executive pay awards in history. While Musk has no guaranteed salary, he remains the world’s richest person, with a net worth of roughly $480 billion.
The Delaware Supreme Court’s ruling could take several months, and regardless of the outcome, Musk is expected to receive significant stock-based compensation through the replacement plan.
