In a stunning legal reversal, the Delaware Supreme Court has paved the way for tech billionaire Elon Musk to finally claim a colossal $56 billion compensation package from Tesla. The decision, delivered on Friday, December 20, 2025, overturns earlier rulings that had invalidated the historic 2018 pay deal.
Court Overturns Earlier Rulings
The five-judge appeals panel determined that Chancellor Kathaleen McCormick of the Delaware Court of Chancery ruled improperly when she ordered the complete rescission, or throwing out, of Musk's compensation plan. In a pair of 2024 rulings, Chancellor McCormick had invalidated the package, calling the approval process "deeply flawed" and describing Musk as the paradigmatic 'Superstar CEO' who manipulated a vulnerable board.
However, the higher court saw it differently. "It is undisputed that Musk fully performed under the 2018 grant, and Tesla and its stockholders were rewarded for his work," the new ruling stated. The court's decision effectively rejects the two prior judgments from the Court of Chancery.
A Long-Running Legal Battle
The legal saga began after Tesla shareholder Richard Tornetta challenged the award as excessive, despite it being approved by a majority of shareholders. Following a five-day trial, the award was initially struck down in January 2024. Chancellor McCormick upheld her determination in December 2024 after an appeal, setting the stage for the latest showdown in the state's Supreme Court.
Throughout the protracted case, Tesla's board remained staunchly in Musk's corner. In August 2025, they approved an interim compensation award worth about $29 billion for him. This was followed by the unveiling of an even more ambitious new pay package, tied to performance targets, which could be worth as much as $1 trillion. Shareholders easily approved this latest package on November 6, 2025.
What Comes Next?
With this appeal victory, the path is now clear for the world's richest person to receive a windfall that once stood as the largest in corporate history, though it has since been eclipsed by his own newer proposals. Attorneys representing the Tesla shareholders who challenged the package said in a statement they are considering their next steps.
The ruling marks a significant victory for Musk and Tesla's board, reinforcing the board's authority in setting executive compensation and validating the original shareholder vote. It concludes a major chapter of uncertainty surrounding the landmark pay deal that was designed to keep Musk tied to the electric vehicle giant during its critical growth phase.
