Elon Musk's 2018 Tesla pay package musk be restored, Delaware supreme court rules
Summarize this article with:
In this articleElon Musk's 2018 CEO pay package from Tesla, worth some $56 billion when it vested, must be restored, the Delaware Supreme Court ruled Friday.The decision likely ends the years-long fight over Musk's record-setting compensation. Musk's 2018 CEO pay package from Tesla, comprised of 12 milestone-based tranches of stock, was unprecedented at the time it was proposed. After it was granted, the pay plan made Musk the wealthiest individual in the world.A shareholder named Richard J. Tornetta sued, filing a derivative action in 2018, accusing Musk and the Tesla board of a breach of their fiduciary duties. Delaware's business-specialized Court of Chancery decided in January 2024 that the pay plan was improperly granted and ordered it to be rescinded.In her decision, Chancellor Kathaleen McCormick found that Musk "controlled Tesla," and that the process leading to the board's approval of his 2018 pay plan was "deeply flawed." Among other things, she found the Tesla board did not disclose all the material information they should have to investors before asking them to vote on and approve the plan.After the Tornetta ruling, Musk moved Tesla's site of incorporation out of Delaware, bashed McCormick by name in posts on his social network X, formerly Twitter, where he has tens of millions of followers, and called for other entrepreneurs to re-incorporate outside of the state.Tesla also attempted to "ratify" the 2018 CEO pay plan by holding a second vote with shareholders in 2024. As CNBC previously reported, a law firm that currently represents Tesla in this appeal penned a bill to overhaul corporate law in Delaware earlier this year. The bill was passed by the Delaware legislature in March, and if it had applied retroactively, it could have affected the outcome of this case.This is a developing story. Please check back for updates.Got a confidential news tip? We want to hear from you.Sign up for free newsletters and get more CNBC delivered to your inboxGet this delivered to your inbox, and more info about our products and services.© 2025 Versant Media, LLC.
All Rights Reserved. A Versant Media Company. Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Data also provided by