Delaware Supreme Court reinstates Elon Musk's $55 billion pay package from 2018

• Elon Musk will receive his 2018 Tesla pay package worth $55.8 million.
• Delaware's Supreme Court ruled Musk is entitled to the package on Friday.
• A judge ruled against the pay package in 2024.

Elon Musk is entitled to his $55.8 billion Tesla pay package from 2018, Delaware's Supreme Court ruled.

Delaware Chancery Court judge Kathaleen McCormick struck down the compensation package last year after a Tesla shareholder sued over the massive payday, which was tied to a series of growth goalposts for the EV company.

The Delaware Supreme Court's ruling overturns that decision and said Friday that the lower court had made an error. The court said that voiding Musk's 2018 pay package was "inequitable" because it "leaves Musk uncompensated for his time and efforts over a period of six years."

"Because it is the unmaking of an agreement, rescission is an extreme remedy and should only be granted by a court of equity when it is 'clearly warranted,'" the Supreme Court wrote.

Tesla shareholders recently approved an even bigger pay package of up to $1 trillion for Musk if Tesla achieves further sales and growth goals, such as deploying a million robotaxis for commercial use. Tesla did not immediately respond to a request for comments on the fate of the newly approved package now that the 2018 one has been restored.

The decision to withhold his 2018 pay package prompted Musk to criticize Delaware on several occasions. Delaware's long-standing reputation for being business-friendly is rooted in the Delaware General Corporation Law, which serves as the foundation of its corporate law.

"Companies should get the hell out of Delaware," Musk wrote on X in August 2024.

At the time, two of Musk's companies — Tesla and SpaceX — were incorporated in Delaware. He moved those companies to Texas in 2024.

Major companies have ditched Delaware

Despite Delaware's position as a central incorporation hub, a series of court rulings left some prominent companies wondering if they could find stronger legal protections somewhere else, including VC firm Andreessen Horowitz.

The firm announced in July that its primary business, AH Capital Management, would no longer be incorporated in Delaware because "legal uncertainty" had worried investors and entrepreneurs on its board.

"As a result, many of the companies we fund and the entrepreneurs that we talk to are taking a second look at whether they should incorporate in other jurisdictions, prompted by the departure from Delaware of significant technology companies like Dropbox, Tripadvisor, and Tesla," the firm said in a blog post.

The firm said it's reincorporating in Nevada, an increasingly popular alternative.

Businesses incorporated in Delaware account for a large chunk of the state's revenue. As of 2024, more than 2.1 million businesses were incorporated in Delaware, meaning a widespread exodus could do serious damage to its economy.

Even so, Delaware Secretary of State Charuni Patibanda-Sanchez told Business Insider that officials aren't spooked by the "political rhetoric."

"What our data is showing is that Delaware is still the preeminent place to incorporate your business," she said.

Patibanda-Sanchez added: "We don't believe that Delaware's position as the corporate leader and corporate capital of the world is being threatened in any significant way. We always come under threat, though, because states are always trying to get a piece of the action."