In a landmark ruling that concludes a seven-year legal saga, the Delaware Supreme Court has cleared the path for tech titan Elon Musk to receive his monumental 2018 CEO compensation package from Tesla Inc. The decision, delivered on Friday, reverses a lower court's judgment and paves the way for what is now a staggering $140 billion stock-based payout to the world's wealthiest individual.
Court Overturns Earlier Ruling, Cites Musk's Performance
The state's highest court unanimously reversed a pair of judgments by Chancellor Kathaleen McCormick of Delaware's Court of Chancery. The earlier ruling had found that Musk improperly influenced the Tesla board members who devised the compensation plan and ordered its rescission.
However, the five-judge appeals panel held that Chancellor McCormick ruled improperly. The Supreme Court emphasized that Elon Musk had "fully performed" under the terms of the 2018 grant, leading to immense rewards for Tesla and its stockholders. The court's opinion stated that completely cancelling the payout would leave Musk "uncompensated for his time and efforts over a period of six years." Instead of rescission, the Supreme Court awarded a nominal damage of $1.
The Journey of the $56 Billion Package That Ballooned to $140 Billion
The long-contested pay package was originally approved by Tesla's board in 2018 as a bold incentive to drive the electric vehicle maker to unprecedented heights. Valued at approximately $56 billion at the time, its value has skyrocketed alongside Tesla's market performance, reaching an estimated $140 billion today.
The package had been on hold since a Tesla investor, who held just nine shares according to court filings cited by Bloomberg, successfully sued to block it in Delaware, where the automaker was incorporated at the time. Friday's ruling effectively reinstates the full compensation plan.
What This Means for Elon Musk's Historic Fortune
This legal victory is set to significantly widen the already vast wealth gap between Musk and his billionaire peers. His net worth, according to Forbes Real Time Billionaires, recently soared past $679 billion, cementing his position as the richest person in history and breaching the $500 billion mark for the first time.
The reinstatement of the $140 billion pay package is expected to provide another massive boost to his fortune. This development follows a period where Musk's wealth has surpassed the combined net worth of other tech giants like Jeff Bezos, Mark Zuckerberg, and Jensen Huang.
Key takeaways from this historic ruling include:
- The Delaware Supreme Court's unanimous decision ends a seven-year legal fight over Musk's 2018 Tesla compensation.
- The stock-based package, originally worth $56 billion, is now valued at approximately $140 billion.
- The court ruled that Musk earned the payout by delivering exceptional performance for Tesla and its shareholders.
- This reinstatement will further solidify Elon Musk's status as the wealthiest person in modern history.
