The Delaware Supreme Court has ruled that Elon Musk’s 2018 CEO pay package from electric vehicle maker Tesla (TSLA), worth $56 billion, must be restored.
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“We reverse the Court of Chancery’s rescission remedy and award $1 in nominal damages,” the judges on the Delaware Supreme Court wrote in their opinion. The judges in the matter said that an earlier lower court decision to void Musk’s entire pay package was “too extreme,” and that the previous ruling didn’t give Tesla a chance to say what a fair compensation ought to be for its CEO.
The latest decision likely ends a years-long fight over Musk’s record-setting compensation from Tesla. The 2018 CEO pay package, comprised of 12 tranches of stock, was unprecedented at the time it was issued. After it was granted, the pay plan made Musk the wealthiest person in the world.
Tesla Shareholder Lawsuit
Many of Tesla’s shareholders objected to Musk being paid more than $50 billion. One shareholder named Richard J. Tornetta filed a lawsuit over Musk’s compensation, accusing Tesla’s board of directors of a breach of their fiduciary responsibilities.
Delaware’s Court of Chancery ruled in 2024 that the pay plan was improperly granted and ordered it to be rescinded based on grounds it was excessive and not in the best interests of the company or its stockholders. After that ruling, Musk moved Tesla’s state of incorporation out of Delaware, bashed McCormick by name in social media posts, and called for other companies to re-incorporate elsewhere.
Is TSLA Stock a Buy?
The stock of Tesla has a consensus Hold rating among 32 Wall Street analysts. That rating is based on 11 Buy, 12 Hold, and nine Sell recommendations issued in the last three months. The average TSLA price target of $382.87 implies 20.43% downside from current levels.
