The Highest Salary in History: Musk Receives Tesla Options Again

The Delaware state court has restored Elon Musk’s record compensation from Tesla, and this decision is already being called one of the most high-profile corporate verdicts of the decade. This concerns the 2018 compensation package, which at the time of approval was valued at $56 billion, and today, accounting for Tesla stock growth, is effectively worth about $139 billion. For almost two years, this package was considered voided, but the Delaware Supreme Court put a decisive point — in Musk’s favor.

The ruling was issued on December 19 and overturned the lower court’s 2024 decision, which had deemed the compensation “unfathomable” and unfair. At that time, Judge Kathleen McCormick concluded that Tesla’s board of directors acted under conflicts of interest and key deal details were not disclosed to shareholders. As a result, the package was completely canceled, provoking a furious reaction from Musk and damaging Delaware’s reputation as the leading corporate haven in the U.S.

Now the Supreme Court stated directly that a full cancellation of the compensation was an improper and unfair measure. In its 49-page ruling, the court emphasized that such an approach effectively left Musk uncompensated for six years of work, despite all contractually stipulated targets being achieved. From the court’s point of view, this violated basic principles of proportionality and fairness. For Musk, this is not just a financial victory, but a strategic win.

The 2018 compensation package was designed not as a “salary” but as a set of options tied to strict operational and market goals. It provided the right to purchase about 304 million Tesla shares at a deeply discounted price if the company achieved specified capitalization and revenue targets. All these conditions were met by the company, but due to the lawsuit, the options were never exercised.

If Musk exercises all options, his stake in Tesla would increase from about 12.4% to 18.1% of the expanded share base. This sharply strengthens his control over the company — and, according to Musk himself, this has always been his key concern. Deepwater Asset Management managing partner Gene Munster stated plainly: for Elon, this is primarily a victory in the struggle for control, not just about money.

The market reacted moderately. Tesla shares rose less than 1% in after-hours trading, indicating that investors had largely priced in this outcome beforehand. Far more significant is another aspect: had the appeal failed, Tesla would have had to recognize expenses of about $26 billion over two years for a new compensation package promised to Musk at today’s much higher stock price. For the company’s financial statements, this would have been an extremely painful scenario.

The history of this conflict has become symbolic of a broader discussion about the limits of judicial intervention in corporate governance. Musk openly accused Delaware courts of “activism” and hostility toward tech founders. He called for businesses to leave the state, and Tesla indeed re-registered in Texas. Following it, Dropbox, Roblox, Trade Desk, and Coinbase also moved their legal domiciles to Texas or Nevada.

Nevertheless, Delaware remains the most popular state for registering public companies in the U.S. That is why the current Supreme Court ruling has systemic significance. According to Brian Dunn, director of the Institute for Compensation Studies at Cornell University, the court likely did not want to come between shareholders and their decisions. Recall that both in 2018 and recently in November, Tesla shareholders overwhelmingly approved Musk’s compensation.

After the jurisdiction move to Texas, Tesla also changed the corporate rules. Now, only investors owning at least 3% of company shares can file a lawsuit for corporate law violations. At current market capitalization, this is about $30 billion. Effectively, only Musk himself holds such a stake, sharply reducing the risk of repeat lawsuits.

Lawyers who challenged the compensation stated that they are considering next steps but emphasized that they are proud to have participated in the “historic first-instance ruling,” which, in their view, highlighted fiduciary responsibilities of the board and largest shareholder.

Musk reacted concisely, in his own style. On X, he wrote one word: “Vindicated.” For a person simultaneously managing Tesla, SpaceX, xAI, and still handling the financial aftermath of the Twitter acquisition, this decision indeed seems timely.

Two years of litigation were not wasted. Now he can also settle the debts related to X (Twitter).