Musk wins US court appeal of $56 bn Tesla compensation deal

A Delaware appeals court on Friday allowed Elon Musk to get a disputed $56 billion Tesla compensation package, overturning a prior ruling in the lengthy lawsuit.

The Delaware Supreme Court overturned two decisions by Chancellor Kathaleen McCormick of the Court of Chancery, paving the way for the world’s wealthiest individual to receive an additional financial boon.

In early 2024, McCormick annulled the 2018 package in two decisions. While the package was once historically significant, it has now been surpassed by Musk’s newest Tesla deal.

The five-judge appellate court said McCormick wrongly ordered the deal canceled, so Musk’s deal was voided.

The court stated, “Musk unequivocally fulfilled his obligations under the 2018 grant, and Tesla, along with its shareholders benefited from his efforts,” as it overturned the rescission.

Richard Tornetta, a Tesla shareholder, challenged the 2018 compensation package in court, calling it excessive despite majority approval.

In a statement released online on Friday, attorneys representing Tesla stockholders indicated they were considering further action.

The court annulled the award in January 2024 after a five-day trial, deeming the procedure “profoundly defective.” The board demonstrated susceptibility to Musk’s influence, “the archetypal ‘Superstar CEO,'” noted McCormick, who reaffirmed her resolve in December 2024 after an appeal.

Tesla’s board has consistently endorsed Musk during the legal proceedings, sanctioning an “interim” compensation package in August valued at around $29 billion, followed by the introduction of a remuneration plan potentially reaching $1 trillion.

On November 6, Tesla shareholders approved the current package, which ties to a few performance and valuation goals.