In a major victory for the world's richest person, a United States appeals court has overturned a previous decision, paving the way for Tesla CEO Elon Musk to finally receive his colossal $56 billion compensation package. The ruling, delivered on Friday, marks a significant turn in a legal battle that has stretched for years.
Court Reverses Earlier Ruling
The Delaware Supreme Court's five-judge panel rejected the prior judgments made by Chancellor Kathaleen McCormick of the Delaware Court of Chancery. Chancellor McCormick had invalidated the 2018 pay package in a pair of 2024 rulings, calling the approval process "deeply flawed" and stating the board was vulnerable to manipulation by Musk, whom she described as the "paradigmatic 'Superstar CEO.'"
However, the appeals court determined that ordering a full rescission—throwing out the entire package—was improper. The judges emphasized in their ruling that "It is undisputed that Musk fully performed under the 2018 grant, and Tesla and its stockholders were rewarded for his work." This key finding led to the reversal of the earlier remedy.
A Saga of Shareholder Support and Legal Challenge
The original 2018 compensation plan, once considered historically large, was approved by a majority of Tesla shareholders. It was later challenged in court by shareholder Richard Tornetta, who argued the award was excessive. Following a five-day trial, the court struck it down in January 2024, a decision Chancellor McCormick upheld in December 2024 after an appeal.
Throughout the legal proceedings, Tesla's board remained firmly in Musk's corner. In August 2025, the board approved an interim compensation award for Musk worth approximately $29 billion. They later proposed a new, even more ambitious package potentially worth up to $1 trillion, which shareholders easily approved on November 6, 2025.
Implications and What Comes Next
This appellate court decision clears a major legal hurdle for Musk, setting the stage for him to receive the monumental $56 billion payout. The case highlights the intense scrutiny over executive compensation, particularly for high-profile CEOs of transformative companies like Tesla.
The ruling underscores the principle that when performance targets are met, as the court found they were, contractual agreements should be honored. For Tesla investors and observers of corporate governance, this marks the conclusion of a defining chapter in the company's history, even as a new, staggering compensation plan begins to take shape.
