Tesla in court to restore Elon Musk’s $56 billion pay package — biggest in corporate history; and why stakes are high for the US state of Delaware
Tesla is back in court this week, urging the Delaware Supreme Court to reinstate CEO Elon Musk’s $56 billion compensation package, the largest in the corporate history. As reported by Reuters, the legal battle started after a lower court invalidated the shareholder-approved deal in January 2024. The legal battle has now entered in its final stage and the outcome could reshape only Tesla’s leadership but also the future of Delaware’s corporate governance model.
The most expensive pay package ever
Elon Musk’s 2018 pay deal was made around the ambitious performance milestones tied to Tesla’s market value and operational growth. However, Elon Musk has not met those targets and a Delaware judge ruled that the process also lacked sufficient independence and transparency, calling the board’s approval ‘deeply flawed’. As reported by Reuters, Tesla is now appealing the decision arguing that shareholders had full knowledge and voted overwhelmingly in favour.“This was the most informed stockholder vote in Delaware history,” said Tesla attorney Jeffrey Wall during oral arguments. “Reaffirming that would resolve this case.”
Why Delaware is on the line
Delaware, is home to more than half of the US publicly traded companies and it is widely seen as the gold standard for corporate law. But this case has put its Court of Chancery under scrutiny. If the Supreme Court upholds the lower ruling, it could signal a shift toward stricter oversight of executive compensation, potentially driving companies to reconsider incorporating in the state.Legal experts warn that a ruling against Tesla could undermine Delaware’s reputation for predictable, business-friendly rulings—an identity that has helped it attract thousands of corporate registrations and billions in tax revenue.
Elon Musk’s role and Tesla’s future
The stakes are equally high for Tesla. Musk’s leadership is deeply intertwined with the company’s brand, innovation, and investor confidence. A failure to restore the pay package could raise questions about Musk’s long-term commitment and Tesla’s ability to retain visionary talent.Tesla CEO Elon Musk is said to earn tens of billions of dollars from a record-breaking compensation package even if he fails to meet most of the ambitious goals set by the bard of the company. As reported by Reuters, Musk could surpass the lifetime earbibggs of CEOs such as Mark Zuckerberg, Larry Ellison, Tim Cook and Jensen Huang by just achieve some relatively modest milestones. In September this year, the Tesla board proposed a 10-year compensation package which could award Musk up to $878 billion in stocks on the condition of hitting a series of ‘Mars-shot’ gaols. The goals include breakthroughs in robotics, autonomous driving, and massive profit and valuation targets. However, as reported by Reuters, Elon Musk could still earn more than $50 billion by meeting just a handful of easier goals without actually transforming Tesla’s products or business.
