Musk Wins Delaware Court Restores Tesla Pay Package in Full
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It'll take you one second. I'm going to promise you 10 years of this podcast for free. No paywalls. I'm not going to charge you anything ever, but I'm going to give you 10 years of this show for free. I've already been doing it for five years and I plan on doing it for 10 more. And the only way that we can continue doing this is with your support. So one second of your time to hit the subscribe button right now would help the show tremendously. Thank you so much. The Delaware Supreme Court just handed Elon Musk a $139 billion windfall. Now, the court reversed a lower court ruling that had stripped Musk of his 2018 pay package from Tesla, a package that was worth $56 billion when it was granted and has ballooned to $139 billion at Friday's closing stock price.
Now, Musk is already the richest person on Earth, worth an estimated $679 billion, and this ruling makes him significantly richer. Now, for almost two years, the Delaware judge had rejected this pay package, not once but twice, calling it unfathomable and the approval process deeply flawed. So what has changed here? How did the state's highest court reverse a ruling that seemed so definitive over that amount of time? Now, the answer involves a shareholder with just nine Tesla shares. a legal battle that damaged Delaware's reputation as a corporate-friendly state, and a 49-page ruling that said the lower court went too far. Today, we're going to walk through the original lawsuit, but the lower court found why the Supreme Court disagreed and what this means for Musk's control of Tesla going forward.
And we'll get right into that after this short break. Now, the Delaware Supreme Court issued its ruling on Friday, December 19th, 2025, restoring Musk's 2018 compensation package in full. And the court awarded Tesla exactly $1 in nominal damages. A single dollar is the only penalty. And the 2018 pay package gave Musk options to acquire about 304 million Tesla shares at a deeply discounted price. that represents around 9% of Tesla's total outstanding stock. The package was structured around 12 tranches of stock options, each tied to ambitious financial and operational milestones. And when the board approved it in January 2018, Tesla's market cap hovered between $50 billion and $75 billion. Now, at that moment,
The company was still struggling to scale up production of the Model 3, was burning through cash. There were skeptics everywhere predicting failure. Hitting all 12 milestones seemed like a crazy idea, a long shot. And the package was designed as an all-for-nothing, like a Hail Mary. There's no base salary. He didn't have any guaranteed payout. Only stock options tied to extreme performance targets. Musk hit every single one of them. Tesla's market cap today sits at $1.6 trillion. That 30-fold increase is what a $56 billion grant became worth $139 billion. Now, the lawsuit that challenged this pay package came from an unlikely source. Richard Tornetta, a shareholder who owned just nine Tesla shares, filed a derivative action in 2018.
So a derivative action is a lawsuit filed on behalf of the company itself against its own executives or board. Tornetta accused Musk and the Tesla board of breaching their fiduciary duties by approving such a massive award. He argued that Musk had too much control over the board and that the approval process was essentially rubber stamping whatever Musk wanted.
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