In a dramatic decision likely to reverberate through the business world, a Delaware judge has once more rejected Tesla CEO Elon Musk’s astronomical $56 billion pay package, calling it an excessive reward orchestrated under dubious circumstances.
The ruling, issued by Chancellor Kathaleen McCormick, upholds her earlier decision to rescind Musk’s 2018 compensation plan, despite a recent shareholder vote to reinstate it. McCormick’s opinion highlighted significant issues with the vote, including misleading proxy statements and Musk’s undue influence over negotiations.
Tesla’s reaction was swift. “The ruling is wrong, and we’re going to appeal,” the company declared on Musk’s social media platform, X. Musk himself lambasted the court’s authority, insisting that “shareholders should control company votes, not judges.”
A Billionaire’s Payback in Legal Battles
Musk’s compensation package was designed to reward him with Tesla stock options contingent on achieving ambitious milestones. Originally valued at $56 billion, the package has ballooned to $101 billion amid Tesla’s meteoric rise, fueled by Musk’s unorthodox leadership style and market-defining innovations.
Despite Tesla shareholders voting in favor of reinstating the plan in June, McCormick ruled that a company cannot “reset” facts post-trial to justify an outcome. “Allowing defeated parties to revise judgments would render lawsuits interminable,” she argued.
The Fallout and Factions
The decision has split opinions within Tesla’s ecosystem. Investors, analysts, and Musk’s online loyalists expressed frustration over the court’s dismissal of the shareholder vote. Many voiced concerns that rejecting the package might push Musk to divert his attention to ventures outside Tesla, from artificial intelligence projects to his role as a newly appointed advisor in the federal government’s efficiency drive.
Gary Black, a managing partner at an investment fund holding Tesla stock, predicted the ruling might be overturned by a “more pragmatic” Delaware Supreme Court.
Meanwhile, Tesla’s stock dipped 1.4% in after-hours trading following the decision.
A Hefty Fee for Justice
In a separate blow to Tesla, McCormick ordered the company to pay $345 million in legal fees to attorneys who brought the case—a sum dwarfed by their initial $6 billion request but still one of the largest awards in securities litigation history.
The dispute underscores Musk’s polarizing role as both a visionary leader and a magnet for legal challenges. Whether the decision will hold after appeal remains to be seen, but the stakes for Tesla’s future—and Musk’s ongoing dominance—could not be higher.
For now, Musk’s $56 billion payday remains out of reach, entangled in a legal saga as unpredictable as the man at its center.
