Elon Musk Fights to Reinstate $56B Tesla Deal in Supreme Court

• Delaware Supreme Court deliberates shareholder lawsuit challenging Elon Musk’s $56 billion Tesla pay package.
• Case raises critical questions about fiduciary duties and corporate governance practices.

Elon Musk’s legal battle over his $56 billion Tesla pay package is nearing its conclusion, as the Delaware Supreme Court reviews the case brought by shareholder Richard Tornetta. The appeal follows a 2023 ruling that invalidated the CEO’s 2018 compensation plan, citing flaws in the approval process.

On October 15, 2025, CBT News and News.az reported that Musk’s attorneys presented their case to a five-justice panel of the Delaware Supreme Court. The appeal challenges the lower court’s decision by Delaware Chancellor Kathaleen McCormick, who sided with the shareholder’s claims that Tesla’s board lacked independence and failed to secure a fair deal for shareholders.

Tornetta’s lawsuit, originally filed in 2018, claimed that Musk exerted improper influence over Tesla’s board during the approval process for his compensation plan. Chancellor McCormick described the process as “deeply flawed” and ruled that it violated fiduciary duties, emphasizing the need for independence and fairness in corporate governance decisions.

Tesla’s attorneys argue that Musk’s pay package was performance-based and fair, citing its connection to significant growth in the company’s value under his leadership. They maintain that shareholders approved the plan after being fully informed of its terms. Despite a second shareholder vote in June 2024 reaffirming the package, Chancellor McCormick ruled that the re-approval did not constitute a legally valid compensation plan under her directive.

The Supreme Court is also reviewing $345 million in legal fees awarded to Tornetta’s attorneys. A final decision is expected in the coming months, potentially setting important precedents for corporate compensation practices.

The case has broader implications beyond Musk’s compensation. Following McCormick’s 2023 ruling, several companies—including Tesla, Dropbox, and Andreessen Horowitz—relocated their state of incorporation from Delaware to jurisdictions like Texas and Nevada. These moves reflect dissatisfaction with Delaware’s legal environment for corporate directors and have sparked legislative amendments aimed at slowing the “Dexit” trend.

The outcome of the appeal will determine whether Musk’s original compensation plan is reinstated or if Tesla’s 2025 replacement package will take effect. Both scenarios could influence how corporate boards navigate executive pay and shareholder rights in future governance disputes.