In a major legal victory for the world's wealthiest person, Elon Musk is now set to receive his colossal $56 billion compensation package from Tesla after a successful court appeal. The Delaware Supreme Court made the decisive ruling on Friday, December 19, 2025, overturning a previous judgment that had blocked the payout.
Court Overturns Earlier Ruling Against Musk
The appeals court's five-judge panel rejected two prior judgments from Chancellor Kathaleen McCormick of the Delaware Court of Chancery. Chancellor McCormick had struck down the 2018 pay package in rulings delivered in 2024, calling the approval process "deeply flawed." She had ordered the award to be rescinded, even though a majority of Tesla shareholders had voted for it.
However, the higher court found that Chancellor McCormick made an error by ordering the entire package to be voided. The court emphasized in its written decision that "It is undisputed that Musk fully performed under the 2018 grant, and Tesla and its stockholders were rewarded for his work." This statement underscored the court's view that Musk had met all the ambitious performance targets tied to the compensation plan.
Long Legal Battle Originated from Shareholder Lawsuit
The entire case began with a lawsuit filed by a Tesla shareholder named Richard Tornetta. He challenged the compensation as excessive, despite its initial shareholder approval. Following a five-day trial in January 2024, the Court of Chancery sided with Tornetta and invalidated the award.
Chancellor McCormick had argued that Tesla's board was "vulnerable to manipulation" by Musk, whom she labeled a "paradigmatic superstar chief executive." She reaffirmed this position in December 2024 after an initial appeal, setting the stage for the final showdown in the state's Supreme Court.
Tesla's Board and Shareholders Continue Support for Musk
Throughout the lengthy court battle, Tesla's board of directors consistently supported Musk. In August 2024, they approved an interim compensation award estimated at about $29 billion. Later, they proposed a new, even more ambitious pay package valued at up to one trillion dollars.
On November 6, 2025, Tesla shareholders overwhelmingly approved this latest compensation plan, which is linked to a series of demanding performance and valuation milestones. This vote demonstrated continued strong investor confidence in Musk's leadership.
Following the Supreme Court's decision, lawyers representing the Tesla shareholders who brought the case stated they are reviewing the ruling and considering their next steps. This leaves open the possibility of further legal action, though the path for Musk to receive the historic $56 billion award is now clear.
