Tesla's Fight For Elon Musk's $56B Payday Will Be Decided By The DE Supreme Court

Elon Musk's ongoing "will he, won't he" relationship with his potential $56 billion Tesla payday seems to be finally heading to the wire. The Tesla board first awarded Musk the gigantic payout in 2018, a move that was approved by 73% of shareholders. However, after a lawsuit was filed by a shareholder (presumably not one of the 73%), a judge in Delaware annulled the payout. The presiding judge, Judge Kathaleen McCormick, said the Tesla directors who negotiated the amount were swayed by Musk's superstar appeal and described the sum as an "unfathomable" amount. She also noted that the Tesla board lacked independence from Musk. The ruling prompted Elon Musk to say he wanted to move Tesla's legal headquarters to Texas. 

However, the company's next step was to ask its shareholders to vote on the package again. This time, 72% of the shareholders approved the award, although this did not have a binding effect on the court's ruling. Tesla's latest appeal was heard by the Delaware Supreme Court in October 2025. During the hearing, Tesla's attorney argued that the 2024 shareholder vote was the "most informed stockholder vote in Delaware history." The court's decision could have major implications not just for Musk's pocket, but also for the state of Delaware, which has been criticized for being hostile towards entrepreneurs. At the time of writing, the matter is still being considered by the Delaware Supreme Court, with a final ruling expected soon. 

Tesla has had its fair share of well-documented troubles in recent times (including its much-recalled Cybertruck). Against this background, and recent figures that show a 37% drop in profits, it's easy to criticize Elon Musk's payout as being undeserved. However, to be fair, the pay award was dependent on certain performance metrics being met within specific timeframes. For instance, one milestone involved Tesla's market value reaching over $650 billion within a ten-year time limit. This was achieved in 2020, after less than three years. The entire package, made up of 12 tranches of stock options, vested only as each milestone was achieved, meaning Musk's compensation was fully contingent on Tesla's growth. 

However, that doesn't retract from the size of the payment, which is orders of magnitude ahead of other corporate payouts. According to the BBC, the package was over 300 times that of the next top-earning boss (in 2023) and over 3,000 times that of the average CEO's annual compensation. Yet, while for most of us, the thought of a pay package worth $56 billion is beyond imagination, Tesla shareholders are about to vote on an even bigger pay package for their unconventional chairman. If the $1 trillion package is approved, it will make the original payout look like small change.